How to Make Paneer Butter Masala from Scratch

What is Paneer Butter Masala?

Quick answer: Paneer butter masala (also called paneer makhani) is a rich North Indian curry made with soft paneer cubes in a smooth, creamy tomato-based gravy flavoured with Kashmiri chilli, garam masala, and finished with butter and cream. It is one of the most popular Indian restaurant dishes worldwide — mildly spiced, deeply aromatic, and luxuriously textured.

The secret to restaurant-quality paneer butter masala at home is a well-cooked tomato-onion base, the right use of Kashmiri chilli for colour without heat, and finishing with cold butter and cream off the heat. This recipe delivers all of that.

Ingredients

Serves 4

For the Gravy Base

• 3 medium tomatoes, roughly chopped
• 1 medium onion, roughly chopped
• 6 garlic cloves
• 1-inch piece ginger
• 10 cashews (soaked in warm water for 20 minutes)
• 2 tbsp oil or ghee
• 2 green cardamom pods
• 1 bay leaf
• 1 tsp Kashmiri chilli powder
• ½ tsp turmeric
• 1 tsp coriander powder
• 1 tsp salt

To Finish

• 400g paneer, cut into 3cm cubes
• 2 tbsp butter
• 3 tbsp fresh cream
• 1 tsp garam masala
• 1 tsp sugar or honey (balances acidity)
• 1 tsp kasuri methi (dried fenugreek leaves), crushed
• Salt to taste

Method

Step 1: Build the Gravy Base

Heat oil in a heavy pan. Add cardamom pods and bay leaf and let them sizzle for 30 seconds. Add onion and cook until golden (8–10 minutes). Add garlic and ginger and cook for 2 minutes. Add tomatoes and cook until completely soft and the oil begins to separate (10–12 minutes). Add Kashmiri chilli, turmeric, coriander powder, and salt. Cook for 3–4 minutes.

Step 2: Blend to a Smooth Sauce

Remove the bay leaf. Add the soaked cashews to the pan. Cool slightly, then blend the entire mixture to a very smooth paste. Pass through a fine sieve for a restaurant-smooth texture (optional but recommended). Return to the pan.

Step 3: Cook the Sauce

Simmer the blended sauce over medium heat for 5–7 minutes, stirring regularly, until it darkens slightly and the oil begins to separate at the edges. Add 100–150ml water to reach your preferred consistency.

Step 4: Add Paneer and Finish

Add paneer cubes and simmer gently for 3–4 minutes — don't boil vigorously or the paneer will toughen. Remove from heat. Stir in butter, cream, garam masala, sugar, and crushed kasuri methi. Taste and adjust salt. Serve immediately.

Tips for Restaurant-Quality Results

• Cook the tomatoes properly: The tomatoes must be cooked until completely broken down and the oil separates. Rushing this step produces a raw, acidic sauce.
• Kashmiri chilli for colour: Use Kashmiri chilli powder generously for the characteristic deep orange-red colour without excessive heat. Learn more: What is Kashmiri Chilli?
• Cashews for creaminess: Soaked cashews blended into the sauce give it body and richness without relying entirely on cream.
• Finish off the heat: Add butter, cream, and garam masala after removing from heat to preserve their delicate flavours.
• Kasuri methi is non-negotiable: Crushed dried fenugreek leaves added at the end give paneer butter masala its distinctive restaurant aroma. Don't skip it.

Variations

Chicken Butter Masala (Murgh Makhani)

Replace paneer with marinated, grilled chicken pieces. The gravy is identical. Add the cooked chicken in Step 4 and simmer for 5 minutes to absorb the sauce.

Vegan Version

Replace paneer with firm tofu (pressed and pan-fried until golden), butter with vegan butter or coconut oil, and cream with coconut cream. The flavour profile changes slightly but remains delicious.

Frequently Asked Questions

What is the difference between paneer butter masala and paneer tikka masala?

Paneer butter masala has a smooth, creamy tomato-cashew gravy with a mild, buttery flavour. Paneer tikka masala uses grilled (tikka) paneer in a spicier, more robust tomato-onion gravy. Butter masala is richer and milder; tikka masala is smokier and more intensely spiced.

Can I use store-bought paneer?

Yes. For best results, soak store-bought paneer in warm water for 15–20 minutes before using — this softens it and removes any preservative taste. Pat dry before adding to the sauce.

Why is my paneer butter masala too sour?

The tomatoes are too acidic or weren't cooked long enough. Add ½–1 tsp sugar or honey to balance. Cooking the tomatoes longer also mellows their acidity. Using ripe, sweet tomatoes makes a significant difference.

Can I make paneer butter masala ahead of time?

Yes — the gravy base can be made 2–3 days ahead and refrigerated. Add paneer, butter, and cream when reheating. The flavour actually improves overnight as the spices develop.

How do I make paneer at home?

Heat 1 litre of full-fat milk to just below boiling. Add 2–3 tbsp lemon juice or white vinegar and stir gently until the milk curdles. Strain through a muslin cloth, rinse with cold water, and press under a heavy weight for 30–60 minutes. Fresh homemade paneer is significantly better than store-bought.

Spices Used in This Recipe

• What is Kashmiri Chilli? Heat, Colour & How to Use It
• What is Garam Masala? Ingredients, Uses & How to Make It
• Turmeric in Cooking: Benefits, Uses & How Much to Add
• How to Use Masala in Everyday Cooking

Shop the Spices for This Recipe

Explore our Kashmiri chilli, garam masala, and single-origin turmeric — small-batch, packed at peak freshness for the best possible curry.