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In many emerging countries, agri-food value chains are transforming rapidly. One emblematic trend is the proliferation of supermarkets and other modern retailers. Supermarkets affect the way supply chains are organized and may also influence the types of foods purchased and eaten by consumers. Research on what this means for people’s diets and nutrition is still relatively scant. Here, we analyze the effects of supermarkets on child diets and nutrition in China, using nationally representative panel data with information on households’ access to supermarkets and individual-level dietary and anthropometric indicators. Employing a variety of difference-in-difference approaches, we find that improved access to supermarkets leads to higher child dietary diversity and nutrient intakes, especially among children in rural areas and from low-income households. Supermarkets are also found to increase child height, but not weight. The positive nutritional effects are mediated through supermarkets contributing to more variety in local food supplies and lower average food prices. Our findings suggest that the spread of supermarkets has improved child dietary quality and nutrition in China.