© The Author 2017; all rights reserved. Published by Oxford University Press on behalf of the International Epidemiological Association Background: Findings in the observational retail food environment and obesity literature are inconsistent, potentially due to a lack of adjustment for residual confounding. Methods: Using data from the CARDIA study (n ¼ 12 174 person-observations; 6 examinations; 1985-2011) across four US cities (Birmingham, AL; Chicago, IL; Minneapolis, MN; Oakland, CA), we used instrumental-variables (IV) regression to obtain causal estimates of the longitudinal associations between the percentage of neighbourhood food stores or restaurants (per total food outlets within 1 km network distance of respondent residence) with body mass index (BMI), adjusting for individual-level socio-demographics, health behaviours, city, year, total food outlets and market-level prices. To determine the presence and extent of bias, we compared the magnitude and direction of results with ordinary least squares (OLS) and random effects (RE) regression, which do not control for residual confounding, and with fixed effects (FE) regression, which does not control for time-varying residual confounding. Results: Relative to neighbourhood supermarkets (which tend to be larger and have healthier options than grocery stores), a higher percentage of grocery stores [mean-¼ 53.4%; standard deviation (SD) ¼ 31.8%] was positively associated with BMI [b ¼ 0.05; 95% confidence interval (CI) ¼ 0.01, 0.10] using IV regression. However, associations were negligible or null using OLS (b ¼ 0.001; 95% CI ¼ 0.01, 0.01), RE (b ¼ 0.003; 95% CI ¼ 0.01, 0.0001) and FE (b ¼ 0.003; 95% CI ¼ 0.01, 0.0002) regression. Neighbourhood convenience stores and fast-food restaurants were not associated with BMI in any model. Conclusions: Longitudinal associations between neighbourhood food outlets and BMI were greater in magnitude using a causal model, suggesting that weak findings in the literature may be due to residual confounding.