Abstract Introduction Low birth weight (LBW) is one of the major predictors of perinatal survival, infant morbidity, and mortality, as well as the risk of developmental disabilities and illnesses in future lives. The effect of the nutritional status of pregnant women on birth outcomes is becoming a common research agenda, but evidence on the level of low birth weight (LBW) and its association with prenatal iron status in Ethiopia, particularly among rural residents, is limited. Thus, this study aimed to assess the prevalence, predictors of LBW, and its association with maternal iron status using serum ferritin concentration in Haramaya district, eastern Ethiopia, 2021. Methods A community-based prospective cohort study design was conducted. Of a total of 427 eligible pregnant women followed until birth, 412 (96.48%) were included in the final analysis. Iron status was determined using serum ferritin (SF) concentration from venous blood collected aseptically from the ante-cubital veins analyzed on a fully automated Cobas e411 (German, Japan Cobas 4000 analyzer series) immunoassay analyzer. Iron deficiency(ID) and iron deficiency anemia (IDA) were classified as having SF less than 15 μg/L and SF less than 15 μg/L and Hb level of < 11.0 g/dl during the first or third trimester or < 10.5 g/dl during the second trimester as well, respectively. Birthweight was measured within 72 h of birth and < 2500 g was considered LBW. Birthweight was measured within 72 h of birth and < 2500 g was considered as LBW. A Poisson regression model with robust variance estimation was used to investigate the factors associated with LBW and the association between maternal iron status and LBW. An adjusted prevalence ratio with a 95% confidence interval was reported to show an association using a p-value < 0.05. Results About 20.2% (95% CI: 16%-24%) of neonates were born with LBW. The prevalence of LBW was 5.04 (95% CI = 2.78–9.14) times higher among women who were iron deficient during pregnancy compared to those who were normal. The neonates of women who were iron deficient during pregnancy had lower birth weight (aPR=5.04; 95% CI = 2.78–9.14) than the neonates of women who were normal. Prevalence of LBW was higher among mothers who were undernourished (MUAC < 23cm) (aPR = 1.92; 95% CI= 1.33–2.27), stunted (height <145cm) (aPR=1.54; 95% CI=1.04–2.27) and among female neonates (aPR=3.70; 95% CI= 2.28–6.00). However, women who were supplemented with iron and folic acid (IFAS) during pregnancy had a 45% decreased chance of delivering low birth weight (aPR= 0.55; 95% CI=0.36–0.84). Conclusion We found that LBW is of public health significance in this predominantly rural setting. ID during pregnancy is found to have a negative effect on birth weight. IFA supplementation, the maternal under-nutrition, height, and sex of neonates were identified as predictors of low weight at birth. To improve maternal nutritional status, health interventions must address targeted strategies promoting desirable food behavior and nutritional practices. These include; promoting the consumption of diversified and rich iron food to improve the maternal nutritional status. A continued effort is needed in enhancing universal access and compliance with IFA supplementation to improve maternal health. Intervention strategies that are complementary and comprehensive across the vulnerable periods for women during pregnancy and their neonates that are based on a life-cycle approach are suggested.