Background On‐site deferral for low hemoglobin (Hb) is common in most countries and deferral rates commonly vary between 1% and 20%. Blood banks continuously strive to reduce deferral rates as these imply an immediate loss of products, a waste of materials, a waste of staff and donor time, and potential loss of donors. Despite many efforts, the main cause of donor deferral—the variability in hemoglobin measurement outcomes—remains largely unaddressed. Study Design and Methods Repeated hemoglobin measurements obtained at donor intake were used to estimate the variability in measurement outcomes (measurement variability). This information is incorporated in a new algorithm for donor deferral where the mean hemoglobin level of a donor is used to determine both donor eligibility and the deviance of individual measurement outcomes. The algorithm was tested on a cohort of new Dutch donors that started between 2012 and 2022 to evaluate its impact on the donor deferral rate. Results Historical data from 439,376 new donors with a deferral rate of 5.3% were analyzed by applying the new donor deferral algorithm. It was found that 92% of all deferrals were unnecessary as Hb levels were within the range of expected measurement variability. Contrarily, it appeared that 460 donors (0.10%) made 704 donations (0.06%) whilst not complying with donor eligibility criteria. Discussion Not accounting for measurement variability can be shown to not only result in unnecessary on‐site deferrals but also results in donations by donors that can be shown not to comply with the legally required minimum Hb levels.