Cost-effective interventions are needed to address undernutrition, particularly micronutrient deficiencies, which are common in children under the age of five in low- and middle-income countries. A community-based, non-randomized clinical trial was undertaken in the Kurram district of Khyber Pakhtunkhwa from January 2018 to June 2019, to evaluate the effect of locally produced micronutrient powder (local name: Vita-Mixe) on plasma micronutrient status, hemoglobin level, and anthropometric outcomes. Children aged 24-48 months old were recruited and allocated to the intervention and control arm of the study. The enrolled children in the intervention arm received one micronutrient powder (MNP) sachet for consumption on alternate days for 12 months. To assess the impact of the intervention on plasma levels of zinc, vitamin D, vitamin A, and hemoglobin level, blood samples were taken at baseline and after one year following the intervention. The analysis was conducted using Enzyme-Linked Immunosorbent Assay (ELISA), atomic absorption spectrometry, and an automated hematology analyzer. For the impact on growth parameters, the anthropometric assessment was performed using WHO standard guidelines. A 24 h dietary recall interview was used to assess the nutrient intake adequacy. Results showed that in the intervention arm, children had on average a 7.52 ng/mL (95% CI 5.11-9.92, p-value < 0.001) increase in the plasma level of vitamin A, 4.80 ng/mL (95% CI 1.63-7.95, p-value < 0.002) increase in vitamin D levels and 33.85 µg/dL (95% CI 24.40-43.30, p-value < 0.001) increase in the plasma zinc level, as well as a 2.0g/dL (95% CI 1.64-2.40, p-value < 0.001) increase in hemoglobin level. Statistically significant improvement was observed in the weight-for-height z-score (WHZ) (from -1.0 ± 0.88 to -0.40 ± 1.01, p < 0.001) and weight-for-age z-score (WAZ) (from -1.40 ± 0.50 to -1.05 ± 0.49, p < 0.001) in the intervention group compared to the control group. No statistically significant change was observed in the height-for-age z-score (HAZ) in the intervention group (p = 0.93). In conclusion, micronutrient powder supplementation is a cost-effective intervention to improve the micronutrient status, hemoglobin level, and growth parameters in under-five children, which can be scaled up in the existing health system to address the alarming rates of undernutrition in Pakistan and other developing countries.