Iron-deficient anaemic infants perform worse in tests of mental and motor development than do iron-sufficient infants of a comparable age. A randomised, double-blind trial was done to monitor the effects of iron supplementation on performance in the Bayley scales of mental and motor development among 12-18-month-old infants in Indonesia. Iron-deficient anaemic infants (n = 50) were assigned randomly to receive dietary ferrous sulphate or placebo for 4 month. Similar treatment randomisation was done among nonanaemic iron-deficient (n = 29) and iron-sufficient (n = 47) infants. Before intervention, the mean mental and motor scores of the iron-deficient anaemic infants were significantly (p < 0.01) lower than those of the nonanaemic iron-deficient and iron-sufficient classes. After intervention, developmental delays were reversed among iron-deficient anaemic infants who had received iron but they remained the same among placebo-treated iron-deficient anaemic infants. Neither ferrous sulphate nor placebo had significant effects on the scores of the other two iron-status classes. The poor performance of 12-18-month-old iron-deficient anaemic infants in the Bayley scales of mental and motor development can be improved to the level of performance of iron-sufficient infants by treatment with ferrous sulphate.