The study has examined the prevailing marketing system, utilization, marketed surplus / consumption, channels of distribution, processing / demand and supply scenario of milk in Jammu and Kashmir. The study is based on the primary data collected from 150 households rearing milch animals, 20 vendors and 20 milk shops from each delineated agro-climatic zones, besides qualitative and quantitative information obtained from co-operative / private dairy owners involved in milk trade. Crossbred cows have been found to have higher productivity than of buffaloes and indigenous cows. Marketed surplus as percentage of total production varies from 68 per cent in intermediate zone to 73 per cent in sub-tropical zone. Overall, sale price of milk has shown a highly erratic trend, irrespective of the zone. Per capita milk consumption varies from 338 g/day in intermediate zone to 569 g/day in sub-tropical zone and is higher in each zone than minimum quantity recommended by the Indian Council of Medical Research. Producer share in consumer rupee has been found highest in channels I and IV. The dairy cooperative, a most significant market functionary in milk trade, is either missing or handles meagre quantity of milk. The study of milk processing has revealed that profit per litre in packaged milk is encouraging. Also, organized sector meets only 21.76 per cent and 16.32 per cent demand of the cities and towns of Kashmir and Jammu divisions, respectively. The study has suggested that an integrated dairy development project should be implemented in the state to boost milk production with regular / remunerative market to the milk producers and to capture a major share of urban milk markets with regular supply of quality milk.