Paratuberculosis (Johne's disease) is endemic in the U.S. and Kentucky cattle industry, affecting both beef and dairy cattle. The disease affects the productivity of cattle ( lowering milk production, reducing the weights of calves) and eventually causes the death of infected animals. The disease spreads among cattle on farms, primarily through fecal shedding of the organism, and may be brought onto a farm through the purchase of infected animals. Since the disease often has long incubation and subclinical stages, testing may be necessary to confirm its presence. From late 1993 into early 1994, a random sample of blood samples drawn for brucellosis testing was also examined for paratuberculosis. This analysis indicated that less than one percent of Kentucky's beef cows and about six percent of its dairy cows are infected with paratuberculosis. Using this information about incidence, an economic analysis was conducted to measure the financial losses to the Kentucky cattle industry. Two alternative approaches were used. One, a "net present value" approach measured the impact on the current and future earnings and value of infected animals. The alternative approach, a "market value" approach, measured the impact by using market prices to assess the loss of infected animals and their productivity. The two approaches resulted in similar results: a $6 million loss utilizing the net present value method and a $5.7 million loss using the market value approach. The conclusions from both methods are conditional upon the assumptions regarding cattle costs, production levels and age of onset of disease. Measured against the size of the dairy and beef industries separately, it is apparent that costs are much more important for the dairy industry than the beef industry. Using either method, about two-thirds of the costs are borne by the dairy industry, which is much smaller than the beef industry.