Anemia diagnosis in populations residing at high altitude (HA) involves an adjustment of hemoglobin (Hb) values owing to the increase in its concentration with altitude. The suitability of the adjustment has been questioned since Hb concentrations depend on how adapted a population is to HA. In Peru, anemia in preschool children (PSC) is a matter of severe public concern for its high rates; in the city of Puno (∼3800 MASL), for example, 67.7% of children under 3 years are diagnosed with anemia. Here, we conducted an observational study in PSC living at different altitudes in Puno to assess Hb, iron status, and the suitability of altitude-adjusted Hb values in defining iron deficiency anemia. After adjusting Hb, 65.66% of the population had anemia, while only 4.8% of PSC had anemia when using unadjusted Hb. Receiver-operating characteristic curves using total body iron (TBI) as a marker of iron status are presented. In the 36- to 59-month age group, unadjusted Hb performed better than altitude-adjusted Hb. In the 6- to 35-month age group, anemia (adjusted or unadjusted) was not associated with TBI. We conclude that Hb adjustment by altitude is not appropriate. Anemia at an early age is not entirely attributable to iron deficiency.