<p><b>Background:</b> Smallholder dairy farming in much of the developing world is based on the use of crossbred cows that combine local adaptation traits of indigenous breeds with high milk yield potential of exotic dairy breeds. Pedigree recording is rare in such systems which means that it is impossible to make informed breeding decisions. High-density single nucleotide polymorphism (SNP) assays allow accurate estimation of breed composition and parentage assignment but are too expensive for routine application. Our aim was to determine the level of accuracy achieved with low-density SNP assays.</p> <p><b>Methods:</b> We constructed subsets of 100 to 1500 SNPs from the 735k-SNP Illumina panel by selecting: (a) on high minor allele frequencies (MAF) in a crossbred population; (b) on large differences in allele frequency between ancestral breeds; (c) at random; or (d) with a differential evolution algorithm. These panels were tested on a dataset of 1933 crossbred dairy cattle from Kenya/Uganda and on crossbred populations from Ethiopia (N = 545) and Tanzania (N = 462). Dairy breed proportions were estimated by using the ADMIXTURE program, a regression approach, and SNP-best linear unbiased prediction, and tested against estimates obtained by ADMIXTURE based on the 735k-SNP panel. Performance for parentage assignment was based on opposing homozygotes which were used to calculate the separation value (<i>sv</i>) between true and false assignments.</p> <p><b>Results:</b> Panels of SNPs based on the largest differences in allele frequency between European dairy breeds and a combined Nelore/N'Dama population gave the best predictions of dairy breed proportion ( r² = 0.962 to 0.994 for 100 to 1500 SNPs) with an average absolute bias of 0.026. Panels of SNPs based on the highest MAF in the crossbred population (Kenya/Uganda) gave the most accurate parentage assignments (<i>sv</i> = -1 to 15 for 100 to 1500 SNPs).</p> <p><b>Conclusions:</b> Due to the different required properties of SNPs, panels that did well for breed composition did poorly for parentage assignment and vice versa. A combined panel of 400 SNPs was not able to assign parentages correctly, thus we recommend the use of 200 SNPs either for breed proportion prediction or parentage assignment, independently.