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Background: To examine the socio-demographic factors associated with the decline in undernutrition among preschool children in India from National Family Health Survey (NFHS)-3, 2005–06 to NFHS– 5, 2019–21. Methods: For this study data were obtained from India’s nationally representative datasets such as NFHS-3 and NFHS-5. The outcome variables for this study were Binary undernutrition which were defined as the coexistence of anemia and either stunting or wasting and Undernutrition triad which were defined as the presence of Iron deficiency anemia, stunting and wasting, respectively. Decomposition analysis was used to study the factors responsible for a decline in undernutrition. This method was employed to understand how these factors contributed to the decline in undernutrition whether due to change in the composition (change in the composition of the population) or propensity (change in the health-related behaviour of the population) of the population over a period of 16 years. Results: Results showed that rate, which contributes 85.26% and 65.64%, respectively, to total change, was primarily responsible for a decline in both binary undernutrition and undernutrition triad. Reduction in Binary undernutrition was mainly explained by the change in the rate of education level of the mothers and media exposer during the inter-survey period. On the other hand, the decline in the Undernutrition triad can be explained by household wealth index, mother’s education, birth order and a change in people’s knowledge or practice about the preceding birth interval. Conclusion: Identifying important factors and understanding their relationship with the decline of undernutrition can be beneficial for reorienting nutrition-specific policies to achieve the targets of the Sustainable Development Goals by 2030.