Most common causes of microcytic anemia in children are iron deficiency anemia (IDA) and thalassemia. Differentiation of these and detection of coexistence is essential for genetic counseling and to set a treatment plan. Aim is to characterize the frequency of IDA and thalassemia trait (TT) in children presenting with hypochromic, microcytic anemia and to define the significance of blood count parameters in differential diagnosis. Of the 200 enrolled, 107 were male (53.5%). In total 154 had IDA (77%), 27 had β-TT (13.5%), and in 11 (5.5%) both conditions coexisted. Eight patients had α-thalassemia gene mutations, 3 of these also had IDA. RBC, MCV, Mentzer index, serum iron, TIBC, ferritin were significantly different between IDA and β-TT patients (P<0.001); however, RDW was not different between the 2 groups (P>0.05). Sensitivity and specificity of Mentzer index for the detection of β-TT were 100% and 69.4%, respectively. The positive and negative predictive values of Mentzer index in diagnosing β-TT were 36.6% and 100%, respectively. Differential diagnosis of microcytic anemia is important in children, especially in regions where IDA and thalassemia are both prevalent. We found that 7% of children referred to our clinic for hypochromic, microcytic anemia had both TT and IDA. Our data showed that serum iron, ferritin, TIBC, MCV, and Mentzer index were all valuable markers in diagnosing IDA and were significantly different compared with β-TT patients; RDW was not different between the 2 groups.