The study on economics of farming systems was carried out in northern transitional zone of Karnataka. It was based on primary data collected from the sample respondents in peri-urban and rural areas of the zone. The data pertained to the year 2010-11. The sample respondents practiced as many as 24 different farming systems, which included crops, vegetables, flowers, plantations, sericulture, dairy, poultry and sheep and goat rearing activities. The top four farming systems in each of the situation of peri-urban and rural areas based on highest per cent of adoption were considered for economic analysis. In peri-urban area of Dharwad, the net returns were highest in the system involving crops and dairy (` 33533.56). In rural area of Dharwad, the net returns were highest in the system involving crops, dairy and plantation (` 57285.23). Whereas, in the case of Belgaum peri-urban area the net returns were highest in system involving crops, vegetables, dairy and poultry (` 11142.62). In rural area the farming systems consisting of crops, dairy, goat performed much better (` 31668.41). The dairy was the most common non-crop component included in all most all the farming systems and it was found profitable in all the farming system in Dharwad area. The vegetables was one of the important components of the farming systems in the peri-urban areas of Dharwad and Belgaum and found to be profitable in most of the situations.