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Background Vitamin B12 deficiency is one of the most common micronutrient deficiencies and is associated with poor cognitive development and growth. Vitamin B12 is crucial for normal cell division and differentiation, and it is necessary for the development and myelination of the central nervous system. The aim of the present study is to measure the effect of daily supplementation of vitamin B12 on the neurodevelopment and growth of young children in Nepal. Methods/design We are conducting an individually randomized, double-blind, placebo-controlled trial with 600 marginally stunted children 6–11 months old (length for age less than −1 z-score). Children are randomized to receive a lipid-based paste containing vitamin B12 or placebo daily for 12 months. The main outcomes are changes in growth (z-scores) and in neurodevelopment measured by the Bayley Scales of Infant and Toddler Development, Third Edition, from baseline until the end of the study. Discussion If vitamin B12 supplementation benefits early child development and growth, this will have consequences for dietary recommendations for malnourished children worldwide. Trial registrations ClinicalTrials.gov Identifier: NCT02272842. Registered on 21 October 2014. Universal Trial Number: U1111-1161-5187. Registered on 8 September 2014. Electronic supplementary material The online version of this article (doi:10.1186/s13063-017-1937-0) contains supplementary material, which is available to authorized users.