Background This study was to describe and quantify the relationships among family poverty, parents' caregiving practices, access to education and the development of children living in low‐ and middle‐income countries (LAMIC). Methods We conducted a secondary analysis of data collected in UNICEF's Multiple Indicator Cluster Surveys (MICS). Early childhood development was assessed in four domains: language‐cognitive, physical, socio‐emotional and approaches to learning. Countries were classified into three groups on the basis of the Human Development Index (HDI). Results Overall, data from 97 731 children aged 36 to 59 months from 35 LAMIC were included in the after analyses. The mean child development scale score was 4.93 out of a maximum score of 10 (95%CI 4.90 to 4.97) in low‐HDI countries and 7.08 (95%CI 7.05 to 7.12) in high‐HDI countries. Family poverty was associated with lower child development scores in all countries. The total indirect effect of family poverty on child development score via attending early childhood education, care for the child at home and use of harsh punishments at home was −0.13 SD (77.8% of the total effect) in low‐HDI countries, −0.09 SD (23.8% of the total effect) in medium‐HDI countries and −0.02 SD (6.9% of the total effect) in high‐HDI countries. Conclusions Children in the most disadvantaged position in their societies and children living in low‐HDI countries are at the greatest risk of failing to reach their developmental potential. Optimizing care for child development at home is essential to reduce the adverse effects of poverty on children's early development and subsequent life.