A field experiment was conducted for two years (1981-83) at the Agricultural Research Station, Dharwad to work out a suitable method and optimum fertilizer level for intercropping of cotton and groundnut The yield of seed cotton was 12.4% higher in paired row planting as compared to normal planting, whereas, the yield of groundnut was 7.3% higher in normal method of planting than in paired row planting. AH the intercropping treatments recorded higher net retums per hectare than sole crops of cotton and groundnut. Intercropping of cotton and groundnut in 1:1 row proportion with recommended fertilizer dose for cotton and 25% of recommended fertilizer dose for groundnut recorded the highest net income of Rs.9532/- per ha.