This study carried out in Nepal in 2009 to analyze the economic situation of dairy cooperatives and its impact on dairy farmers showed that the dairy cooperatives operating at different scales were operating in profit. The net capital ratio for small, medium and large scale was found to be 1.432, 1.01 and 1.127 respectively while the solvency ratio was found to be 0.88, 0.98 and 0.70 respectively and turn over ratio was10.2%,3% and 15.11% respectively. Impact on associated farmer members with cooperatives of different scales reveled that there was no such distinct impact based on scales of operation. However, farmers associated with large scale cooperatives were benefiting from support services like obtaining feed, bran etc in credit. Gender-wise distribution of dairy activities was comparable. It is suggested that Government should create a more enabling environment for dairy sector like providing subsidy in the electricity to the cooperatives, extension services to the farmers, reviewing of the milk price etc. Likewise, dairy cooperatives should also provide more support services to the associated farmer members.