Iron deficiency anemia (IDA) is common among infants and children in Sub-Saharan Africa and is a leading contributor to the global burden of disease, as well as a hindrance to national development. In-home iron fortification of complementary foods using micronutrient powders (MNPs) effectively reduces the risk for IDA by ensuring that the iron needs of infants and young children are met without changing their traditional diet. However, the iron dose delivered by MNPs is high, and comparable on a mg iron per kg body weight to the supplemental doses (2 mg/kg) typically given to older children, which increases diarrhea risk. In controlled studies, iron-containing MNPs modestly increase risk for diarrhea in infants; in some cases, the diarrhea is severe and may require hospitalization. Recent in vitro and in vivo studies provide insights into the mechanism of this effect. Provision of iron fortificants to school-age children and iron-containing MNPs to weaning infants decreases the number of beneficial ‘barrier’ commensal gut bacteria (e.g., bifidobacteria), increases the enterobacteria to bifidobacteria ratio and abundances of opportunistic pathogens (e.g., pathogenic Escherichia coli), and induces gut inflammation. Thus, although iron-containing MNPs are highly effective in reducing IDA, they may increase gastrointestinal morbidity in infants, and safer formulations are needed.