Paneer Butter Masala is a beloved North Indian dish known for its luscious, creamy tomato and cashew-based gravy with aromatic spices. This restaurant-style paneer dish is a global favorite and pairs beautifully with naan, roti, or rice.
Soak the cubed paneer in a large bowl with warm salty water (only if store-bought). In a small bowl, mix together the dahi, 1 tablespoon butter, 1 teaspoon kashmiri chili powder, 1 teaspoon ground coriander, and ¼ teaspoon ground turmeric into a paste.
In a heavy bottom pot or kadhai, add 2 teaspoons of neutral oil on medium heat. Once warm, toast the bay leaf, cinnamon stick, deseeded kashmiri chili pepper, and green cardamom for a minute.
Add the onion and sauté for 5 minutes until transparent and lightly browned. Add the ginger garlic paste and cashews and sauté for another minute. Then, pour in the spiced yogurt paste and stir everything together really well. Continue to sauté for 3 minutes, or until the butter separates on the sides.
Pour the tomato puree in along with ½ cup of warm water. Stir everything together. Cover the pot and simmer for 15 minutes, stirring in intervals.
After simmering, carefully remove the bay leaf and cinnamon stick from the curry. Add salt to taste. Transfer the curry to a blender and blend until smooth.
Melt 2 tablespoons of butter in the pot. Once it's bubbling, add 1 teaspoon kashmiri chili powder and sautè for one minute. Strain the curry through a large mesh strainer back into the pot with ½ cup of warm water.
Stir in a teaspoon of sugar or honey. Adjust the salt to taste. Drain the paneer and add it to the gravy. Continue to simmer the curry for another 5 minutes.
Remove from heat. Rub the kasuri methi between the palm of your hands and garnish with cilantro. Serve warm.
Notes
* Substitute with an additional 1 teaspoon of Kashmiri chili powder
If your blender is made of glass, be sure to let the curry cool before transferring it to the blender to prevent it from exploding.