We assessed resources, challenges and prospects of the dairy industries in four districts of Bangladesh (Mymensingh, Satkhira, Chittagong and Sirajganj) with the participation of 8 to 12 dairy farm families in each district. We used ten participatory rural appraisal (PRA) tools, namely social mapping, semistructured interview, activity profiles, seasonal calendar, pie charts, mobility diagram, matrix ranking, preference ranking and scoring, system analysis diagram and focus group discussion in 57 PRA sessions from September through October 2002. Dairying contributed more to family income (63 to 74%) and utilized a smaller portion of land than did crops. Twenty seven to 49% of cattle feed is rice straw. Only Sirajganj and Chittagong had limited, periodic grazing facilities. Fodder (Napier; Pennisetum purpureum) cultivation was practiced in Sirajganj and Satkhira. Fodder availability increased milk production and decreased disease occurrence. Friesian crossbred cows were ranked best as dairy cattle. The present utilization of veterinary and AI services was ranked highly. Farmers outside the milk union desired milk purchasing centres as the most required service in the future. They identified veterinary and AI services as inadequate and desired significant improvements. The PRA tools effectively identified resources, constraints, opportunities and farmers' perspectives related to the dairy industries in Bangladesh.