The aim of this study was to determine whether the switch from conventional milking systems (CMS) to automatic milking systems (AMS) has positive effects on the productivity growth. Production function analysis was implemented over a rotating panel data of 323 Finnish dairy farms during the period of 2000–2011. The total factor productivity growth was 1.7% per year on farms that stayed in CMS and 3.1% per year on farms that had switched to AMS. The improvement was linked to overall reforms in production technology and an expansion in herd size but the adoption of AMS intensified the positive development.