There is a lack of uniformity in developing and validating indicators of nutritional status among People Living with Human Immunodeficiency Virus (PLHIV). Experiences from low and middle-income countries are scant, and differences in methodological and analytical approaches affect the comparability and generalizability of findings. Therefore, this study investigated the performance of individual diversity score (IDDS) as a proxy indicator of nutritional status among PLHIV. We conducted a facility-based cross-sectional study among 423 PLHIV who were under Antiretroviral Treatment (ART) at clinics in Bahir-Dar, Ethiopia. We collected data on sociodemographic, dietary, clinical, and anthropometric measures. Dietary intake was assessed using 24-Hour dietary recall. Body Mass Index (BMI) was calculated to assess the nutritional status of study subjects. The receiver operating characteristic (ROC) curve analysis was used to assess the ability of the IDDS and Minimum Dietary Diversity for Women (MDD-W) to detect poor nutritional status. Furthermore, sensitivity, specificity, Predictive Values (PPs), and Likelihood Ratios (LRs) were calculated at different cut-off points. IDDS showed good reliability with Cronbach’s Alpha of 0.76. The Area Under the Curve (AUC) of IDDS was 78.5 (95%CI 73.9–83.4). At the IDDS cut-off of 4, the sensitivity and specificity of IDDS to indicate nutritional status were 88.0% (95%CI 81.0–93.0) and 71.0% (95%CI 66.0–76.0), respectively. The AUC of MDD-W was 74.1%, and at the cut-off of 4 the sensitivity and specificity of MDD-W to indicate undernutrition were 73.0% and 72.0%, respectively. Both IDDS and MDD-W have good accuracy as a proxy indicator for measuring the nutritional status of PLHIV. In the prevention of undernutrition among PLHIV especially in a resource-limited setting, IDDS and MDD-W can be used to assess nutritional status.