Paneer Butter Masala Recipe (Paneer Makhani)

This paneer butter masala recipe (or paneer makhani) is my take on the Indian classic, featuring soft paneer coated in a creamy tomato-based sauce with a hint of spice. It's warm and cozy without feeling too heavy. A garnish of red onion, cilantro, and lemon juice helps balance the whole dish.

Most recipes for paneer butter masala are developed to mimic the Indian restaurant dish perfectly. This is not one of them. Don't get me wrong, I enjoy the restaurant version, and I'll order takeout when I'm craving that flavor.

But I don't always want a lot of butter and cream; in my variation, there's a bit more boldness in the flavor and tanginess of the tomato. The resulting paneer dish is rich, comforting, slightly punchy from the spice, and perfect with some garlic naan, hot parathas, or chapatis on the side.

Ingredient Notes

Spices: This recipe uses a mix of whole spices and ground spices, most of which can be found in a standard supermarket. Fenugreek leaves, or kasuri methi, provide a maple-syrupy, earthy, nutty flavor to the butter paneer masala.

It’s a defining flavor in the dish. You can find them in an Indian grocery store or online, but you can sub in a pinch of ground fenugreek if you don’t have the leaves. Want to learn more? Check out my guide to essential Indian spices.

Paneer: You can use store-bought or homemade paneer. If using store-bought, you will need to soak it in hot water for 15 - 20 minutes to help soften it.

Aromatics: Ginger-garlic paste is a typical ingredient used in Indian cooking, but I find it's easiest to simply grate the ginger and garlic into a paste with a microplane. If you have the paste, you can use ½ the amount instead!

Cashews: Make sure to use unsalted, raw cashews.

Ripe Tomatoes: It sounds odd, but fresh tomatoes, even in the dead of winter, provide the necessary consistency for this masala, so don't use a canned product! Ripe plum or Roma tomatoes are ideal, because they are less watery than other varieties. Do not use smaller cherry or grape tomatoes.

For a full list of ingredients and quantities, refer to the recipe card.

🍳 Equipment Note 🍳

I recommend using a high-powered blender to ensure the sauce is as creamy and smooth as possible. An immersion blender won't cut it here. If you don’t have one, you can sub the raw cashews for 1 - 2 tablespoons of cashew butter. Add the cashew butter directly to the blender instead of sauteeing it with the aromatics.

Vegan Variation

The recipe can be completely vegan if you sub butter for vegan butter and firm tofu for the paneer. I recommend frying the tofu first, then simmering it in the sauce for the last couple of minutes.

How to Make Paneer Butter Masala

Step 1 - Soak the paneer and cashews in hot water for 15 minutes. Drain and set aside.

Step 2 - Over medium heat, add the oil, bay leaf, cardamom pods, and cinnamon stick until sizzling. Saute the onions until softened and golden brown, and the raw smell dissipates.

Step 3 - Add the garlic, ginger, and green chili and saute for 30 seconds until aromatic. Stir in the drained cashews and tomatoes. Simmer for 8 - 10 minutes until the tomatoes have broken down and released their juices.

Tip: This is a dish where you really want to get some color on these onions. It adds a lot of flavor!

Step 4 - Add the garam masala and water, and simmer for 5 minutes until the sauce thickens slightly.

Step 5 - Discard the whole spices, then transfer the mixture to a stand blender. Remove the center cap of the blender's lid and place a clean dish towel over the opening (this step helps steam escape from the warm tomato sauce). Puree the mixture until completely smooth.

Step 6 - Wipe the skillet clean, then melt a bit of unsalted butter over medium heat. Stir in the red chili powder, add the tomato puree, and simmer for about 5 minutes to meld the flavors. Crush the fenugreek with your hands and stir it into the sauce, along with the heavy cream (if using), and the paneer cubes.

Step 7 - Simmer the paneer for 2 - 3 minutes until softened and cooked through, then top with cilantro, red onion, and a squeeze of lemon juice. Serve immediately, and enjoy!

Storage Instructions

Leftover paneer butter masala can be stored in the fridge for 2 - 3 days. The sauce tends to thicken after sitting in the refrigerator. Reheat in the microwave until warmed through, adding water as needed to thin out the sauce.

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