The main objective of this study is to evaluate the comparative advantage of olive oil production in Albania using Policy Analysis Matrix (PAM) method. The result indicates that olive oil production in Albania is profitable for the producers. Whereas the DRC ratio equals to 2.2, meaning that olive oil production in Albania does not have a comparative advantage for the given situation of production, prices and technology. This means that while it is profitable for private producers to manufacture olive oil for the domestic market, it does not have a comparative advantage with other EU countries. In order for Albania to develop an olive oil industry comparable to neighboring countries with similar climatic and soil conditions, the country will need to achieve higher productivity similar to those countries.