Lipid-based nutrient supplements (LNS) can help treat undernutrition; however, the dietary adequacy of children supplemented with LNS, and household utilisation patterns are not well understood. We assessed diet adequacy and the quality of complementary foods by conducting a diet assessment of 128 Ugandan children, ages 6–59 months, who participated in a 10-week programme for children with moderate acute malnutrition (MAM, defined as weight-for-age z-score < −2). Caregivers were given a weekly ration of 650 kcal day−1 (126 g day−1) of a peanut/soy LNS. Two 24-h dietary recalls were administered per child. LNS was offered to 86% of targeted children at least once. Among non-breastfed children, over 90% met their estimated average requirement (EAR) cut-points for all examined nutrients. Over 90% of breastfed children met EAR cut-points for nutrient density for most nutrients, except for zinc where 11.7% met cut-points. A lower proportion of both breastfed and non-breastfed children met adjusted EARs for the specific nutritional needs of MAM. Fewer than 20% of breastfed children met EAR nutrient-density guidelines for MAM for zinc, vitamin C, vitamin A and folate. Underweight status, the presence of a father in the child's home, and higher programme attendance were all associated with greater odds of feeding LNS to targeted children. Children in this community-based supplemental feeding programme who received a locally produced LNS exhibited substantial micronutrient deficiencies given the special dietary needs of this population. These results can help inform programme strategies to improve LNS targeting, and highlight potential nutrient inadequacies for consumers of LNS in community-based settings.