Paneer Butter masala recipe – Paneer lover? If so, you must have heard and ate Paneer Butter Masala (पनीर बटर मसाला), also known as Paneer Makhni. As a kid, only paneer dish I knew (about eating) was PBM, and this used to be my favourite. Those were the days when eating paneer was a luxury for me, however paneer still remains top favourite for many.
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What is Paneer Butter Masala
This is a paneer based curry which contains butter and has a creamy texture. Tomatoes, cream and cashews are also added in the gravy to give the gravy that desired creamy texture. As per one survey, butter paneer curry was one of the top five dishes ordered by Indians.
Recipe of this restaurant style Paneer makhanwala is fairly simple and following this recipe, you are likely to get the same taste as you will find in one of your favourite restaurant.

Butter paneer is also sold as paneer makhanwala in some places. If you happen to living on a place where access to paneer is not so easy, follow my other recipe of making paneer at home to make soft fresh paneer at home.
Method
- First of all, heat 1 tablespoon oil in a pan then add chopped onion, tomatoes and cashews to it. Sauté for a minute and add 2 cup of water to it. Cover the pan with lid and let it boil for 10 minutes.
- After 10 minutes, open the lid and stir. Transfer this to a grinding jar and add 2 ice cubes to it. Grind it to a fine smooth paste.
- Heat 1 tablespoon of oil in a pan/Kadhai. Add butter to it and once it melts, add red chilli powder and turmeric powder to it. Sauté for a minute and then add ginger garlic paste to it.
- Once the raw smell goes off, add onion-tomato paste to it. Sauté it till this paste start leaving pan and comes together.
- Now add coriander powder, garam masala and sauté again for a minute. Add 1.5 cup water to it and let the gravy boil. Once boiling, simmer the heat and add sugar, salt and cream to it and cook again for few minutes.
- Now add paneer cubes, Kasuri Methi and cardamom powder to it. Mix well and switch off the heat.

How to make best paneer butter masala
- Its all about butter and paneer. Use decent butter and cream. Don’t get stingy with adding butter and cream.
- You need to make gravy smooth. Use nuts in gravy. Nuts give good smooth texture to gravy.
- Use less spices. Do not add every possible spice you have in your kitchen cupboard and use little quantity.
- Add sugar (or honey). Adding sugar helps in balancing flavours. This curry is not spicy, but on mild notes.
- Use fresh or homemade paneer. If using store bought paneer, add the paneer in hot water for 15-20 mins to soften the paneer.
Paneer Makhni vs Shahi Paneer
It is very easy to get confused between shahi paneer vs paneer makhni or paneer lababdar.
Paneer butter masala has honey or sugar added as well as it has more butter too. Shahi Paneer is less spicier version of Paneer butter masala.
Paneer lababdar on other hand has paneer pieces in gravy.

Serving suggestion
You can serve this with Indian flat bread, like chapatti or naan. You can also pair it with steamed or jeera rice.
If you are a paneer (cottage cheese) fan, I will recommend you trying out some of these paneer recipes from this blog like, Paneer Tikka parcels, Beetroot Paneer, Paneer Burji, Chilli Paneer, Matar Paneer, Kadai Paneer, Shahi Paneer, etc
Keto friendly paneer
Do you know that paneer is great source of fat and protein too? Lots of people who are vegetarian restore to paneer recipes when they are on keto diet.
Read on below for the step by step recipe of restaurant style butter paneer masala.
This recipe has been edited to add additional information on 17 Feb 2021
Recipe Card
Restaurant Style Paneer Butter Masala
Ingredients
- 250 Grams Paneer / Indian Cottage Cheese Cut into pieces
- 1 Cup Onion Medium Chopped
- 1.5 Cup Tomatoes Chopped
- 1 Tablespoon Ginger Garlic Paste
- 10-12 Cashew
- 2 Tablespoon Butter
- 2 Tablespoon Oil
- 1 Teaspoon Salt As per taste
- 1 Teaspoon Kashmiri Red Chilli Powder
- 1/2 Teaspoon Sugar
- 1 Teaspoon Coriander Powder
- 1/2 Teaspoon Turmeric Powder
- 1/2 Teaspoon Garam Masala Powder
- 1/4 Teaspoon Cardamom Powder
- 1/2 Teaspoon Dried Fenugreek Leaves / Kasuri Methi
- 4 Teaspoon Fresh Cream
- Fresh Coriander Leaves For Garnishing
Instructions
- First of all, heat 1 tablespoon oil in a pan then add chopped onion, tomatoes and cashews to it. Sauté for a minute and add 2 cup of water to it. Cover the pan with lid and let it boil for 10 minutes.
- After 10 minutes, open the lid and stir. Transfer this to a grinding jar and add 2 ice cubes to it. Grind it to a fine smooth paste.
- Heat 1 tablespoon of oil in a pan/Kadhai. Add butter to it and once it melts, add red chilli powder and turmeric powder to it. Sauté for a minute and then add ginger garlic paste to it.
- Once the raw smell goes off, add onion-tomato paste to it. Sauté it till this paste start leaving pan and comes together.
- Now add coriander powder, garam masala and sauté again for a minute. Add 1.5 cup water to it and let the gravy boil. Once boiling, simmer the heat and add sugar, salt and cream to it and cook again for few minutes.
- Now add paneer cubes, Kasuri Methi and cardamom powder to it. Mix well and switch off the heat.
- Garnish with coriander leaves and serve hot with lachha parantha or Butter naan.
Notes
- I have used Kashmiri Red chilli powder in my recipe to give the gravy a nice colour. However, you can use normal red chilli powder or paprika powder.
- If your ground paste is not finely ground, then you can sieve it through a strainer to get fine creamy paste.
- I have soaked the paneer cubes in colored water for few mins, to get the orangish color. This is entirely optional, and when using color, I will say use organic food colors.
- If you wish to give golden color to paneer, saute the paneer in 1 tbsp of oil.