Anemia in children younger than 3 years is a public health problem in Peru and worldwide. It is believed that one of the primary causes of anemia is iron deficiency. Numerous studies and reviews have reported that iron deficiency limited psychomotor development in children and that, despite the correction of anemia, children with iron deficiency experienced poorer long-term performance in cognitive, social, and emotional functioning. These outcomes were reported in observational studies, follow-up studies, and experimental studies with a control group. Anemia can decrease school performance, productivity in adult life, quality of life, and the general income of affected individuals. Here we describe possible mechanisms underlying the effect of iron deficiency, with or without anemia, on childhood development. The high rate of anemia in this age group is a cause for concern. Moreover, anemia should be prevented in the first year of life to avoid long-term negative effects on individual development.