Stunting affects 22% children globally, putting them at risk of adverse outcomes including delayed development. We investigated the effect of milk protein (MP) vs. soy and whey permeate (WP) vs. maltodextrin in large-quantity, lipid-based nutrient supplement (LNS), and LNS itself vs. no supplementation, on child development and head circumference among stunted children aged 1-5 years. We conducted a randomized, double-blind, community-based 2 × 2 factorial trial in Uganda (ISRCTN1309319). We randomized 600 children to one of four LNS formulations (~535 kcal/d), with or without MP (n = 299 vs. n = 301) or WP (n = 301 vs. n = 299), for 12 weeks or to no supplementation (n = 150). Child development was assessed using the Malawi Development Assessment Tool. Data were analyzed using linear mixed-effects models. Children had a median [interquartile range] age of 30 [23; 41] months and mean ± standard deviation height-for-age z-score of -3.02 ± 0.74. There were no interactions between MP and WP for any of the outcomes. There was no effect of either MP or WP on any developmental domain. Although LNS itself had no impact on development, it resulted in 0.07 (95%CI: 0.004; 0.14) cm higher head circumference. Neither dairy in LNS, nor LNS in itself, had an effect on development among already stunted children.