In South Africa, haemoglobin (Hb) is measured to screen for iron deficiency (ID). However, low levels of Hb are only a late stage indicator of ID. Furthermore, Hb values are generally not adjusted for altitude even though recommended by WHO. We determined the Hb threshold with the highest combined sensitivity and specificity for detecting ID among South African women living at 1700 m above sea level. In a cross-sectional study of 492 18–25-year-old women, we measured Hb and iron status biomarkers. Using receiver operating characteristic curves, we determined the Hb threshold with maximum Youden Index for detecting ID. This threshold of <12.35 g/dL resulted in a 37.2% anaemia prevalence (20.9% IDA), and sensitivity and specificity of 55.7% and 73.9%, respectively. The WHO altitude-adjusted threshold of <12.5 g/dL resulted in a 39% anaemia prevalence (21.3% IDA), and sensitivity and specificity of 56.8% and 70.8%, respectively. In contrast, using the unadjusted Hb cut-off of <12 g/dL resulted in a 18.5% anaemia prevalence (12.6% IDA), and sensitivity and specificity of 35.1% and 88.6%, respectively. In this sample of South African women of reproductive age an Hb threshold <12.35 g/dL had the highest combined sensitivity and specificity for detecting ID. The diagnostic performance of this Receiver operating characteristic curve-determined threshold was comparable to the altitude-adjusted threshold proposed by WHO. Thus, clinical and public health practice in South Africa should adopt adjustment of Hb for altitude to avoid underestimation of ID and missing women in need for intervention.