Dairy farming continues to be a major agricultural activity in the state of Connecticut. Although the number of dairy farms in the state has declined over the past decade, aggregate production has remained stable, and Connecticut farms have, on average, higher production than New York or Vermont farms. State and local land, environmental, and business policies influence the profitability of the Connecticut dairy industry however its future depends most critically upon dairy market forces and policies that are regional and national in scope. This paper briefly describes the organization of the Connecticut dairy industry within the context of the New England (Federal Order 1) milk market and the larger national dairy industry. It provides historical trend data for a number of economic variables including the number of dairy farmers in Connecticut, total annual milk production, and the price of milk. A milk price forecast for 1995 is also included. The paper then identifies the factors contributing to reported secular trends. It concludes with a brief discussion of regional and national policy issues that are important for the future economic fortunes of Connecticut dairy producers.