A principal effect of agricultural productivity growth is to accelerate urbanization by supplying food, labor and other resources to urban services and industry. Towns and cities may also grow for their own reasons, pulling food and resources out of rural areas. Whether pushed or pulled, the development of markets creates new opportunities for agricultural households. This study tests whether, on balance, proximity to older towns and cities has improved or worsened malnutrition among farm households in 43,850 survey clusters in 46 developing countries between 1986 and 2011, using 83 Demographic and Health Surveys (DHS) combined with other geographic and historical data. Controlling for national income, we find that regions with a longer history of urbanization have children with higher weight-for-height and height-for-age z-scores at a wide range of national income levels. We also find a higher prevalence of overweight among mothers living near older cities. These results suggest that, on average, access to urban markets has reduced rural child stunting and wasting in the surveyed countries, but also increased the risks of overweight for children and adult women. These results motivate the need to guide agricultural market development in ways that promote improved nutrition while limiting the rise of diet-related disease.