The present investigation is an attempt to study the economic aspects of dairying of one of the well known pastoral communities- the Gujjars of the Jammu and Kashmir state of India with objectives to ascertain the socio-economic characteristics and resource structure of Gujjars, to work out the cost and returns from milk production for different herd size categories, to study the marketed surplus of milk and factors affecting it and to estimate the cost of marketing and price spread of milk.Four districts were selected from Jammu region and from each district two blocks were selected and from each block one village was selected purposively. The net return was found highest in large farms of Jammu region. The marketed surplus and per capita consumption of milk was found to be highest in large farms of Jammu region. The highest share of producer in consumer?s rupee was in first channel (Producer- consumer. Cobb-Douglas production function was found best fitted and the entire explanatory variable shows positive relationship with milk production.. Out of these green fodder, dry fodder, concentrates and miscellaneous had significant impact on milk production.