This study analyzed data on the early developmental status of 7352 children, aged from 36 to 59 months, using the Early Childhood Developmental Index (ECDI) to assess literacy-numeracy, physical, social-emotional, and learning domains. The study explored correlates of developmental status with a range of socio-demographic and environmental factors that may impact children’s development. The analyses use data from the Bangladesh Multiple Indicator Cluster Survey, 2012—2013. Overall, about 65% of children had potential for healthy development, with highest rate of being on track being in the physical domain (~ 94%) and the lowest rate in the literacy domain (~ 23%). Older children, who had been breastfed, whose mothers had higher education, and who lived in urban areas were more likely to be developmentally on track. Children, whose family members engaged with them in four or more stimulating activities and read books, were more likely to be on a consistent and positive developmental trajectory. Children who were male, malnourished and experienced physical punishment were less likely to be on a positive developmental track. Policymakers need to invest in early childhood development including the funding of interventions so that children in Bangladesh can achieve their developmental potential.