The Minimum Dietary Diversity for Women (MDD-W) indicator is used as a proxy indicator for assessing micronutrient adequacy among women of the reproductive age group. Variations were observed in studies, and there was also a lack of evidence regarding the performance of this proxy indicator in Ethiopia, a country with diverse dietary consumption practices. This study aimed to validate the performance of the MDD-W in predicting micronutrient intake adequacy among lactating women in Ethiopia. A community-based cross-sectional study was conducted among randomly selected 457 lactating women in Northwest Ethiopia from February 2 to 18, 2023. A multistage sampling technique was used to select 457 study participants. A single multiphasic interactive 24-h dietary recall was used to collect dietary intake data. Ten food groups were used to compute the Minimum Dietary Diversity for Women, and the Mean Adequacy Ratio was used to assess nutrient intake adequacy. Spearman's rank correlation test, Cohen's kappa statistics, and ROC curve analysis were conducted. The optimal cutoff points for Minimum Dietary Diversity for Women were determined by selecting the points that maximized the Youden index. MDD-W had poor positive correlation (ρ = 0.19, p < 0.001) and poor predictive ability (AUC = 0.62, 95% CI: 0.56, 0.67) (p < 0.001) with the Mean Adequacy Ratio in determining micronutrient intake adequacy. The sensitivity and specificity of the MDD-W in the ≥5 food groups standard cutoff were 25.2 and 82.3%, respectively. The optimal cutoff point for MDD-W to predict micronutrient intake adequacy was ≥3 food groups. Minimum Dietary Diversity for Women had a poor correlation and poor predictive ability in predicting micronutrient intake adequacy. The variations noted in studies and differences from the Food and Agriculture Organization recommendations regarding the cutoff and level of performance of MDD-W in defining micronutrient adequacy warrant further investigation.