Anaemia continues to be a burden especially in developing countries that not only affects the physical growth and cognitive development of children but also increases their risk to death. Over the past decade, the prevalence of anaemia among Ugandan children has been unacceptably high. Despite this, spatial variation and attributable risk factors of anaemia are not well explored at national level. The study utilized the 2016 Uganda Demographic and Health Survey (UDHS) data with a weighted sample of 3805 children aged 6–59 months. Spatial analysis was performed using ArcGIS version 10.7 and SaTScan version 9.6. This was followed by a multilevel mixed-effects generalized linear model for the analysis of the risk factors. Estimates for population attributable risks (PAR) and fractions (PAF) were also provided using STATA version 17. In the results, intra-cluster correlation coefficient (ICC) indicates that 18% of the total variability of anaemia was due to communities within the different regions. Moran’s index further confirmed this clustering (Global Moran’s index = 0.17;p-value<0.001). The main hot spot areas of anaemia were Acholi, Teso, Busoga, West Nile, Lango and Karamoja sub-regions. Anaemia prevalence was highest among boy-child, the poor, mothers with no education as well as children who had fever. Results also showed that if all children were born to mothers with higher education or were staying in rich household, the prevalence would be reduced by 14% and 8% respectively. Also having no fever reduces anaemia by 8%. In conclusion, anaemia among young children is significantly clustered in the country with disparities noted across communities within different sub-regions. Policies targeting poverty alleviation, climate change or environment adaptation, food security as well interventions on malaria prevention will help to bridge a gap in the sub regional inequalities of anaemia prevalence.