Intercropping cereals and legumes is practiced widely in the world for improving yields and economic benefits. Shorter legume crops in intercropping are shaded by taller cereals, substantially reducing legume growth and yield. Reducing shade in intercropping by shortening the plant height of cereals by seedling defoliation has been proposed as a practical approach to increase crop yields and land productivity. A two-year field experiment was conducted to investigate the effect of defoliation of cereal crops at seedling stage on the growth and yield of peanut (Arachis hypogaea L.) intercropped with corn (Zea mays L.) or millet (Setaria italica L.). In comparison with non-defoliation controls, defoliation reduced final plant height by 29 cm on average for corn and 18 cm for millet. Photosynthetically active radiation on peanut in intercropping systems with corn or millet intercropping was respectively 27.0% and 22.8% higher than those in controls, significantly improving the light environment of intercropped peanut. Net photosynthetic rates of peanut were on average 25.5% higher in corn and peanut intercropping and 19.6% higher in millet and peanut intercropping than those in non-defoliation controls. Total biomass of intercropped peanut increased owing to increased root growth. Across two years, yield of peanut intercropped with corn was 27.7% and with millet 32.8% higher than those of controls. Defoliation of cereal crops did not affect corn yield but significantly decreased millet yield by 24.5%. Our results suggest that applying seedling defoliation in intercropped corn could increase peanut yield without compromising corn yield in an intercropping system.