Malaria and iron deficiency are major global health problems with extensive epidemiological overlap. Iron deficiency-induced anaemia can protect the host from malaria by limiting parasite growth. On the other hand, iron deficiency can significantly disrupt immune cell function. However, the impact of host cell iron scarcity beyond anaemia remains elusive in malaria. To address this, we employed a transgenic mouse model carrying a mutation in the transferrin receptor (TfrcY20H/Y20H), which limits the ability of cells to internalise iron from plasma. At homeostasis TfrcY20H/Y20H mice appear healthy and are not anaemic. However, TfrcY20H/Y20H mice infected with Plasmodium chabaudi chabaudi AS showed significantly higher peak parasitaemia and body weight loss. We found that TfrcY20H/Y20H mice displayed a similar trajectory of malaria-induced anaemia as wild-type mice, and elevated circulating iron did not increase peak parasitaemia. Instead, P. chabaudi infected TfrcY20H/Y20H mice had an impaired innate and adaptive immune response, marked by decreased cell proliferation and cytokine production. Moreover, we demonstrated that these immune cell impairments were cell-intrinsic, as ex vivo iron supplementation fully recovered CD4+ T cell and B cell function. Despite the inhibited immune response and increased parasitaemia, TfrcY20H/Y20H mice displayed mitigated liver damage, characterised by decreased parasite sequestration in the liver and an attenuated hepatic immune response. Together, these results show that host cell iron scarcity inhibits the immune response but prevents excessive hepatic tissue damage during malaria infection. These divergent effects shed light on the role of iron in the complex balance between protection and pathology in malaria.