The present investigation utilised primary data collected from 200 randomly selected dairy farmers in Dharwad district during 1994-95. The Cobb-Douglas production function was used to analyse the factors influencing milk production and resource use efficiency. The results indicated that feed, the foremost important variable influencing milk production was highly significant at one per cent for all the category of farms. The other inputs viz., labour, fodder and capital were significant between one and ten per cent probability levels. The MVP to FC ratio analysis indicated that expenditure must be diverted from fodder resource to other resources for optimising the returns from milk production because feed, labour and capital inputs were under utilised.