Background: Anemia is a commonly encountered health problem in India. Beta thalassemia and iron deficiency anemia (IDA) are one of the important causes of microcytic hypochromic anaemia. Their differentiation is important because they not only require different management but also have different implications to the community. High Performance Liquid Chromatography (HPLC) is currently the gold standard in diagnosing haemoglobinopathies. However, in a resource poor country like India HPLC may not be widely available, especially in rural areas. Mentzer’s index is commonly used to differentiate IDA and thalassemia. The objective of this study is to correlate the HPLC findings withthe red cell indices andMentzer’s index and study its sensitivity and specificity in differentiating IDA from thalassemia trait. Methods: A cross sectional study was done on 500 anemic patients in a tertiary care centre in Western Maharashtra. Complete blood counts, HPLC was done on patients’ blood samples and Mentzer’s index was calculated. Statistical analysis of data was done by SPSS 16 software. Results: The sensitivity and specificity of Mentzer’s index in differentiating thalassemia from IDA is 39.06% and 79.86% respectively. Conclusion: Mentzer index is a not a reliable marker in diagnosis of thalassemia as it has low sensitivity and specificity. RBC indices have a better correlation and may be used as surrogate markers for the diagnosis of IDA along with serum iron studies in cases where HPLC is not available.