The present study was undertaken to assess the economic performance of small scale dairy farming in two selected urban areas- Gazipur (Industrial area) and Dinajpur (Non-industrial area). A total of 100 small-scale dairy farms were chosen as sample for the study taking 50 dairy farms from the urban areas of each district adopting simple random sampling technique. Data were collected through direct interview with the small dairy farm operator using pre-designed interview schedule. The findings showed that the gross cost (mean) of rearing animals was Tk. 169.91/farm/day in Dinajpur as against Tk. 262.90 in Gazipur, net return/day/animal was Tk.51.53 for dairy farm in Dinajpur and Tk. 79.28 for dairy farm in Gazipur, average milk production/farm /year was 1435 liters in Dinajpur and that was 1775 liters in Gazipur. The Benefit-Cost Ratio (BCR) was found to be 1.68 for dairy farm in Dinajpur and 1.84 for dairy farm in Gazipur which implies that small-scale dairy industry is a profitable enterprise. The major constraints faced by the dairy owners were identified as paucity of green grass, high price and unavailability of feed and medicine, lack of grazing land, inadequate veterinary services, lack of training and technical know how and lack of institutional credit facilities. Small scale dairy industry could be the main sources of providing nutrition to the urban people and as a means of earning extra- income for the small farm-holders if appropriate measures are taken.