Cotton production in India is at cross roads for the past few years. Till recently it was the hybrid that was at the focus but the era of genetically modified cotton has arrived. There has been lot of hue and cry regarding the commercialization of Bt cotton in India since Genetic Engineering Approval Committee (GEAC) has approved the use of Bt cotton seeds. This study has analysed the economic impact of biotechnologically engineered cotton cultivation in Tamil Nadu and the factors affecting the adoption of Bt cotton varieties. The study is based on a sample size of 76 Bt cotton farmers and 44 non-Bt cotton farmers from Salem and Perambalur districts. The results have indicated that only about one-third of the non-Bt cotton farmers are not aware about Bt cotton. Higher yield and higher profitability and lower pest problems have been cited as the important factors behind preference for Bt cotton. The less number of pesticide sprays in Bt cotton is likely to have lot of environmental and health benefits to both farmers and labourers. However, high cost of seeds and incidence of pests and diseases other than bollworm have been reported to be the major bottlenecks in Bt cotton cultivation. The study has made some suggestions to disseminate Bt cotton technology on a wider scale.