A population-based 1:3 age-matched case-control study was conducted during 2006–2009 to assess the role of high-level natural radiation (>1 mSv/year) on congenital mental retardation and cleft lip/palate in the southwest coastal area of Kerala. Dosimetry was carried out in the house where parents resided during conception and the subsequent two trimesters of pregnancy of the study subject. Conditional logistic regression did not suggest any statistically significant association of either mental retardation (n = 445) or cleft lip/palate (n = 116) with high-level natural radiation. The odds of mental retardation and cleft lip/palate among those exposed to high-level natural radiation relative to normal levels of natural background radiation (≤1 mSv/year) were 1.26 (95% CI: 0.91–1.73) and 0.56 (95% CI: 0.31–1.02), respectively, after controlling for gender and maternal age at birth of the study subject. The data did not suggest any dose-related trend in the risk of either mental retardation (P = 0.113) or cleft lip/palate (P = 0.908). Notwithstanding the use of a single dose estimate to reconstruct past radiation exposure and the complex etiology of congenital malformations, it may reasonably be concluded that the prevailing high-level natural radiation in the study area does not appear to increase the risk of either mental retardation or cleft lip/palate among offspring of parents staying in the area.