Anaemia, redistribution of Fe, malnutrition and heightened systemic inflammation during HIV infection confer an increased risk of morbidity and mortality in HIV patients. We analysed information on Fe status and inflammation from a randomised, double blind, controlled phase-III clinical trial in Lusaka, Zambia and Mwanza, Tanzania. Malnourished patients (n 1815) were recruited at referral to antiretroviral therapy (ART) into a two-stage nutritional rehabilitation programme, randomised to receive a lipid-based nutrient supplement with or without added micronutrients. Fe was included in the intervention arm during the second stage, given from 2 to 6 weeks post-ART. Hb, serum C-reactive protein (CRP), serum ferritin and soluble transferrin receptor (sTfR) were measured at recruitment and 6 weeks post-ART. Multivariable linear regression models were used to assess the impact of the intervention, and the effect of reducing inflammation from recruitment to week 6 on Hb and Fe status. There was no effect of the intervention on Hb, serum ferritin, sTfR or serum CRP. A one-log decrease of serum CRP from recruitment to week 6 was associated with a 1·81 g/l increase in Hb (95 % CI 0·85, 2·76; P< 0·001), and a 0·11 log decrease in serum ferritin (95 % CI − 0·22, 0·03; P= 0·012) from recruitment to week 6. There was no association between the change in serum CRP and the change in sTfR over the same time period (P= 0·78). In malnourished, HIV-infected adults receiving dietary Fe, a reduction in inflammation in the early ART treatment period appears to be a precondition for recovery from anaemia.