Anaemia during pregnancy is associated with negative maternal and neonatal outcomes. However, there is limited data regarding prevalence and effects of anaemia during pregnancy in northern Tanzania. The objective of this study was to determine the prevalence and possible risk factors for anaemia and its effect on perinatal outcomes among pregnant women attending antenatal care in Moshi Municipality in northern Tanzania. A cohort of pregnant women aged 14-43 years and in their 3^rd trimester, was recruited from two primary health care clinics between June 2002 and March 2004. Interviews, anthropometric measurements and haematological examinations were conducted on 2654 consenting women. Perinatal outcomes were recorded during delivery and at 1 week after delivery. Of the 2654 participants, 47.4% had anaemia (haemoglobin [Hb] <11g/dl), 35.3% had mild anaemia (Hb= 9–10.9g/dl), 9.9% had moderate anaemia (Hb =7- 8.9g/dl), and 2.1% had severe anaemia (Hb < 7 g/dl). Anaemia was significantly more prevalent in HIV-positive (56.4%) than in HIV-negative women (46.7%), ( P = 0.01). In logistic regression anaemia was independently associated with maternal HIV (OR= 1.5), malaria (OR= 5.2), clinic of recruitment (OR= 1.5) and low income (OR= 1.9). Pregnant women with anaemia were more likely to have low birth weight (LBW) infants. Compared with non-anaemic women, the risk of LBW was 1.6 times and 4.8 times higher for children born to women with moderate and severe anaemia, respectively. In conclusion, anaemia in pregnancy is a severe public health problem in northern Tanzania. Control of maternal anaemia may be one important strategy to prevent LBW in this setting. Measures to prevent malaria and to control anaemia among all pregnant women irrespective of HIV status, should be strengthened. Outside of the health sector broader approaches for anaemia prevention targeting women of lower income, are required.