Consumption of cow's milk (CM) by infants and toddlers has adverse effects on their iron stores, a finding that has been well documented in many localities. Several mechanisms have been identified that may contribute to iron deficiency in this young population group. The most important of these is probably the low iron content of CM, which makes it difficult for infants to obtain the amounts of iron needed for growth. A second mechanism is the occult intestinal blood loss associated with CM consumption during infancy, a condition that affects about 40% of otherwise healthy infants. Loss of iron in the form of blood diminishes with age and ceases after the age of 1 year. A third mechanism is the inhibition of non-heme iron absorption by calcium and casein, both of which are present in high amounts in CM. Fortification of CM with iron, as practiced in some countries, can protect infants and toddlers against CM's negative effects on iron status. Consumption of CM produces a high renal solute load, which leads to a higher urine solute concentration than consumption of breast milk or formula, thereby narrowing the margin of safety during dehydrating events, such as diarrhea. The high protein intake from CM may also place infants at increased risk of obesity in later childhood. It is thus recommended that unmodified, unfortified CM not be fed to infants and that it be fed to toddlers in modest amounts only.