Microcytic hypochromic anemia is common in children, and iron deficiency is its most frequent cause. However, in regions with a high prevalence of thalassemia, including Iran, microcytosis and mild anemia are not necessarily attributable to iron deficiency. Carriers of alpha- or beta-thalassemia may also present with low mean corpuscular volume (MCV), low mean corpuscular hemoglobin (MCH), and mild anemia. Empirical iron prescribing without appropriate diagnostic evaluation may result in ineffective treatment, gastrointestinal adverse effects, delayed recognition of hemoglobinopathies, and missed opportunities for genetic counseling. The Mentzer index, red cell distribution width (RDW), serum ferritin, and C-reactive protein (CRP), particularly in the presence of inflammation, can assist in differentiating iron deficiency anemia from thalassemia trait. Population-based iron supplementation remains important, particularly for infants aged 6–23 months; however, therapeutic iron should be prescribed after assessment of iron status and consideration of possible thalassemia.