Nematode management in cotton has eluded farmers and researchers for decades. Control strategies have typically relied upon highly toxic nematicide application. Site-specific management provides opportunity to improve profitability while maintaining environmental stewardship; and can be based on yield penalty functions estimated from empirical data. A 4-year field-scale experiment was implemented in a commercial Arkansas cotton field known to exhibit crop yield loss due to nematodes. Root-knot nematode population was measured at four times within each plot each year: 1) prior to nematicide application, 2) at planting, 3) at peak bloom, and 4) at harvest. Due to spatial effects, spatial econometric models were estimated to obtain reliable yield response coefficients. Site-specific cotton yield response to treatment, soil texture, and nematode population were evaluated using a spatial error process model. Specific objectives were to estimate cotton yield response to environmental and treatment factors then conduct profitability analyses for site-specific nematicide application. The results support the potential of site-specific nematicide application including management zone delineation. Profitability analysis of variable rate nematicide application provides an initial insight into the potential of site-specific nematode management.