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Income growth alone cannot solve the problem of malnutrition and may in fact create problems linked to overweight and obesity. The challenge from the nutrition perspective is how to sustainably improve the quality of diets, as well as other health-nutrition related behaviours, across different populations and age groups? In nutrition debates in developing countries there is growing interest in the capacity of the private sector to contribute to improved nutrition outcomes. Discussions have incorporated thinking around value chain frameworks, which emerged in the late 1990s to help development actors design interventions that responded to the needs of the private sector and contributed to development outcomes.Value chain approaches can provide useful frameworks to examine the food system and the potential to achieve improved nutritional outcomes by leveraging market-based systems. However, understanding the links between value chains, the overall business environment in which they operate, and nutrition among targeted populations is complex, involving actors and activities working across agriculture, health and nutrition, and very little evidence exists on the potential or the trade-offs involved.In this paper we explore how a value chain framework can inform the design of interventions for achieving improved nutrition. Conceptually, there are three main channels for value chains to improve nutrition: (1) through increased consumption of nutritious foods (a demand side pathway); or (2) through increased incomes from value chain transactions (a supply side pathway) or (3) through increased nutrition value-addition in the chain transactions. These three pathways are interlinked and involve complex dynamics that are not straightforward to understand.We also highlight how these pathways are context specific, and introduce typologies based on supply and demand profile of the specific value chain. Where adequate supply and demand for a specific food exists, interventions would focus on optimising the efficiency and flow of nutrition added-value along the chain. Where demand is constrained or overconsumption is a problem, interventions would work primarily to change consumption patterns, either directly (for example, food transfers) or indirectly (such as, social marketing) shaping market demand. Where supply is constrained, interventions would focus on enhancing supply-side capacity by improving production practices, organising production and post-harvest activities to increase efficiency, and facilitating the expansion of market opportunities. We conclude with a summary of key research areas in this emerging field.