The provision of iron via supplementation or the fortification of foods has been shown to be effective in preventing and treating iron deficiency and iron deficiency anemia in infants and young children. However, iron is a pro-oxidative element and can have negative effects on biological systems even at moderate amounts. An increasing number of studies have reported adverse effects of iron that was given to infants and young-children populations who initially were iron replete. These effects include decreased growth (both linear growth and weight), increased illness (usually diarrhea), interactions with other trace elements such as copper and zinc, altered gut microbiota to more pathogenic bacteria, increased inflammatory markers, and impaired cognitive and motor development. If these results can be confirmed by larger and well-controlled studies, it may have considerable programmatic implications (e.g., the necessity to screen for iron status before interventions to exclude iron-replete individuals). A lack of understanding of the mechanisms underlying these adverse outcomes limits our ability to modify present supplementation and fortification strategies. This review summarizes studies on the adverse effects of iron on various outcomes; suggests possible mechanisms that may explain these observations, which are usually made in clinical studies and intervention trials; and gives examples from animal models and in vitro studies. With a better understanding of these mechanisms, it may be possible to find novel ways of providing iron in a form that causes fewer or no adverse effects even when subjects are iron replete. However, it is apparent that our understanding is limited, and research in this area is urgently needed.