Here’s an easy recipe for the perfect restaurant style paneer butter masala! This recipe has rave reviews from readers (scroll down to see the comments). Luscious tomato based gravy that’s smoked and has that distinct restaurant style flavour – this recipe is always a hit!

This restaurant style paneer butter masala is definitely one of my favorite recipes forever, and it is one of my most viewed recipes on the blog.

So here’s the thing with paneer butter masala – if you are a paneer lover, it is the king of all paneer recipes. I’ve eaten versions of this across the length and breadth of the country (favourite order obviously) and a lot of people can get it very very wrong.

Here’s what a good paneer butter masala or paneer makhani will taste like:

• Luscious gravy thats tomato based and has a natural sweetness with a slight tang
• A mild underlying smokiness that comes from smoking the gravy before adding the paneer
• Really soft paneer that’s NOT fried and is soft mainly because its primarily made from Malai (Cream) or really good quality milk

And here’s what it’s NOT –> Sweet! A lot of restaurants like to add sugar to the gravy. This is also the norm outside India, but good paneer butter masala is not sweet. So stay away from the fake ones!

And today, we are cracking open all the secrets to amazing Paneer Butter Masala with the smokiness, the creaminess and the perfection.

More Paneer Recipes that you’ll love: Saag Paneer, Tandoori Paneer Tikka, Easy Palak Paneer, Paneer Bhurji, Creamy Matar Paneer and Spicy Achari Paneer

Ingredients for Paneer Butter Masala

Here’s what you’ll need for a fantastic Paneer Butter Masala or Paneer Makhani:

Butter, Oil and Cream: Three different fats go into the recipe at different points to create that luscious, creamy gravy. But don’t worry, this doesn’t translate to a really heavy, high on calorie recipe.

Dried Kashmiri Red Chillies: This is a key ingredient. These dried chillies provide colour but don’t have a lot of spice which is perfect for this recipe. If you don’t have this, you can substitute with 1-2 tablespoons Kashmiri Chilli Powder, which you can add along with the other ground spice powders when the blended gravy is simmering.

Onions & Tomatoes: The proportion of onions to tomatoes in this recipe is 1:6. We use onions for the base but its the tomatoes that add most of the flavour.

Ginger Garlic Paste: You can use minced ginger and garlic separately but for convenience ginger garlic paste is made in large amounts and refrigerated in every Indian household. You can also buy ready made paste easily at supermarkets

Cashew nuts: To reduce the amount of cream in the recipe, we use cashews which provide the same creaminess and density but without the calories.

Khus Khus/Poppy Seeds: Khus Khus or white poppy seeds add flavour as well as creaminess.

Spices: We use both whole spices and ground spices in this recipe. Whole spices like bayleaf, cardamom, cloves and cinnamon add the initial flavouring to the onion tomato mixture. You can add them as is or make a bouquet garni like I do so that it easy to fish these out before blending. We add dry spices like chilli powder, turmeric, garam masala later while the blended gravy is simmering. These add a bit of heat and to pack in the flavour

Tomato Ketchup: A super non traditional ingredient but it really works here because it has the perfect blend of sweet, salty, tangy. A little goes a long way!

Kasuri Methi: Kasuri Methi is basically dried fenugreek and used extensively in Indian cuisine. It adds a touch of smokiness and finishes the dish. A little goes a long way, but stocking this in the pantry is a very good idea!

How do you make paneer (cottage cheese) at home?

Making paneer at home is simple and needs only two ingredients – milk and acid (lemon juice or vinegar work well). You will need to heat milk and add the acid and simmer the milk till it curdles and separates into whey and paneer or cottage cheese. I have a super handy, step by step tutorial on how to make paneer here.

You can always make your own paneer at home (which only takes 15 minutes BTW and is the most satisfying experience) or you can buy store bought paneer – look for malai paneer. This recipe is so versatile that if you would rather have chicken butter masala instead, you can always substitute the paneer for chicken. Or use tofu and make tofu butter masala. If you’d like to make it vegan, use oil instead of butter and skip the cream.

How to make Paneer Butter Masala

Here are quick steps to make paneer butter masala

1. Bouquet Garni: Start with wrapping the spices in a muslin or cheesecloth to make a bouquet garni. This helps add all the flavour without having to fish out the spices one by one later
2. Cook the kashmiri chillies, onion, tomato, cashew, poppy seeds and spices together till the tomatoes are soft and pulpy. This is the base of the gravy
3. Remove the bouquet garni (whole spices) and the blend the onion tomato paste to really smooth. You can add some water if required
4. Simmer the gravy along with powdered spices and salt in butter for 10-15 minutes till you can see a little oil floating to the top
5. Smoke the gravy with my dungar method (see video). This takes the gravy to the next level!
6. Add kasuri methi, paneer and cream, cook for a minute or two and you are done!

This recipe is actually easier than you think. And if you have some of my frozen Makhani Gravy, the final steps just take 10 minutes!

I love serving this with plain Basmati Rice or Butter Naan. It’s one of those recipes that have won many readers king or queen of the kitchen. Read the comments and look at the ratings – you know this is a good one!

Watch the Video

This recipe was first published on July 26, 2017 and updated on July 30, 2021 with new images and a new recipe video with no changes to the recipe

More Paneer Recipes You’ll Love

• Paneer Lababdar
• Shahi Paneer
• Creamy Matar Paneer
• Shaam Savera | Palak Paneer Kofta