The paper has looked into the process of structural transformation of India’s dairy sector. During the past two decades, the sector grew at the rate of 4 per cent per year, making milk as the single largest agricultural commodity in the country. The growth in dairying has primarily been driven by yield improvement. A conspicuous shift has been observed in the composition of dairy herd from traditional to crossbred cows and buffaloes, and this led to improvements in milk-yield. Genetic enhancement, better management of stock and farmers’ improved access to milk markets have driven the process of transformation. Nevertheless, the status of dairy infrastructure and the delivery of veterinary services in the country are still poor and concerted efforts are required to bring about further transformation.