Objectives: To evaluate the effect of levonorgestrel-releasing intrauterine system (LNG-IUS) on heavy menstrual bleeding in perimenopausal women. Methods: This was a prospective, observational clinical study conducted on 42 perimenopausal women with heavy menstrual bleeding who met the study eligibility criteria. LNG-IUS was inserted in the postmenstrual phase following baseline evaluation. The patients were followed up at the 4, 12, and 24 weeks. Pictorial blood assessment chart (PBAC) score, hemoglobin and serum ferritin levels, and endometrial thickness were assessed before insertion and during the follow-up visits. Results: Two patients (4.8%) were lost to follow-up, three patients (7.1%) opted for hysterectomy, two women (4.8%) experienced spontaneous expulsion and 35 (83.3%) women continued the usage. Menstrual blood loss assessed using the median PBAC score (interquartile range) significantly reduced (P < 0.001) from the pre-insertion level of 280 (246–306) to 124 (60–200) at 4 weeks to 45 (34–76) at 12 weeks and further to 32 (20–50) at the end of 24 weeks. Simultaneously, a significant (P < 0.001) improvement in the mean hemoglobin and serum ferritin levels and a significant (P < 0.001) decrease in endometrial thickness were observed. The most common side effect was spotting (50.0%) and vaginal discharge (38.1%). Conclusions LNG-IUS causes a remarkable reduction in menstrual blood loss and marked improvement in dysmenorrhea. It also reduces anemia by improving the hemoglobin and ferritin levels. Thus, it can serve as an effective treatment option for heavy menstrual bleeding in perimenopausal women and prevent the need for a hysterectomy.