Specialized dairy farms--those with at least 50 percent of their production from dairy products and with at least $40,000 in total production--fared somewhat better in 1985 than did other U.S. farms. Midsized dairy farms with sales of $100,000 to $499,999 were especially sound in that they had the highest net returns on gross revenue and the lowest overall cost ratio. U.S. dairy production is concentrated in the East North Central and the North Atlantic regions, with other sizable concentrations in the West North Central and Pacific regions. Specialized dairy farms in the North Atlantic region were the most prosperous by several measures: they had the highest returns on gross revenue, the lowest overall cost ratio, and the region had the largest share of farms with positive net returns.