This paper describes the structure of the small-ruminant trade in southwest Nigeria, analyses the factors determining the price of animals, and examines the relationship of prices between markets. Animals imported from the north dominate the sheep and goat trades, and supply and prices are highly seasonal. However, multiple regression shows animal prices to be largely predictable in terms of the characteristics of the animal (breed, sex and live-weight) and the market in which it is sold (location and month of sale). Prices are relatively closely correlated between markets over time, and price relationships between markets reflect the respective structures of the trade in northern and southern animals. Price margins between markets reflect the level of traders' commission and storage costs in addition to the direct costs of transport. The study concludes that there is no evidence for market inefficiency or segregation, and that there is considerable market potential for increased local production of sheep and goats. In policy terms, the market's efficiency implies that government involvement beyond its present, limited facilitative role would not be justified.