The pest problem in cotton is one of the worst among all crops. Outbreak of American Bollworm in epidemic proportion during crop season of 2001 resulted in very heavy damage to cotton crop, especially in the North zone. It is under this background, and after much government hesitation, that the introduction of Bt cotton, resistant to pests, particularly boll worms took place in India in 2002 and in the state of Punjab during 2005-06. Punjab Agricultural University has recommended cultivation of six Bt cotton varieties, namely RCH 134, RCH 317, MRCH 6301, MRCH 6304, Ankur 691 and Ankur 2534 in the state with the approval of Genetic Engineering Approval Committee from kharif season of 2005. Therefore, the study was conducted to examine the performance evaluation of boll worm resistant Bt cotton varieties and its various advantages over the conventional cotton varieties in the state, if any. The study was based on 121 Bt cotton growers and 29 non Bt cotton growers spreading over 8 village clusters (24 villages), 4 blocks and 2 districts i.e Bathinda and Ferozepur which taken together constituted over 50 per cent of total cotton cultivation in the state. Two production year’s experience of Bt cotton and non Bt growers in Punjab during 2007 and 2008 was taken for this purpose. During 2004-05 to 2006-07, cotton performance in the state had been quite encouraging as its per cent share in India’s cotton production was much higher in relation to its share in India’s total cotton acreage e.g. during 2005 -06, Punjab shared only 6.42 per cent of country’s cotton area and contributed as high as 12.95 per cent of total cotton production in India, reflecting much higher production efficiency of cotton per unit of area in the state. During 2008, production of Bt and non Bt cotton declined due to the severe appearance of mealy bugs – a cotton pest. The year 2008 was favorable for the cotton output prices, which has to some extent compensated the profitability of the farmers caused due to yield decline by appearance of mealy bugs. Cost of cultivation of the Bt cotton (Rs 34607/ha) was higher by 5 per cent than non Bt cotton crop (Rs 32960/ha) during 2008. There are several reasons for the higher cost of cultivation of Bt cotton varieties. First, the seed cost of the Bt cotton varieties was quite higher than that of non Bt cotton varieties which accounted for 8 per cent of the total variable cost in the year 2008. Secondly, due to higher yield, the cost of picking was also higher in Bt cotton. Thirdly, the irrigation costs were more in Bt cotton varieties due to more water requirement of the crop as compared to non Bt cotton varieties. Both the gross returns and net returns were higher in Bt cotton in both the years. The gross returns in Bt cotton were Rs 65487/ha in 2007 and Rs 63294/ha in the year 2008, corresponding values for the non Bt cotton were Rs 54146/ha and Rs 51548/ha. In year 2007, the net returns in Bt cotton was higher by 20.80 per cent than non Bt cotton. In Bt cotton per hectare net returns over variable costs were Rs 36958/ha as compared to Rs 30595/ha in non Bt cotton. Surprisingly in the year 2008, with the high intensity of mealy bugs attack the Bt cotton varieties yielded 54.33 per cent more net returns than non Bt cotton varieties. The relative figures for the Bt cotton and non Bt cotton were Rs 28687/ha and Rs 18588/ha. This enhanced performance of Bt cotton varieties may be attributed to higher yield of Bt cotton varieties in the respective years 2007 & 2008 i.e. 29.38 q/ha and 25.29 q/ha in Bt cotton as compared to 23.36 q/ha and 19.38 q/ha in non Bt cotton varieties. It indicates that the yield of Bt cotton was higher by 25-30 per cent than that of non Bt cotton. Though the overall experience of Bt cotton in the state had been quite encouraging, yet acute yield variations had been observed from farmer to farmer in the sample study area. The yield obtained has been as high as about 38 quintals/ ha on some farms and as low as about 10 quintals/ha on the others. There were some farmers where Bt cotton’s performance was below optimal, for reasons that may largely lie outside Bt technology, such as growing cotton in unsuitable areas and faulty management practices. This is what we have to seriously look into and its remedy. Further due to appearance of severe mealy bugs in the state, the Bt cotton yield had declined from 750 kg/ha in 2007 to 624 kg/ha in the subsequent year of 2008.Therefore, this requires the immediate attention of the scientists to avoid any epidemic loss of the crops in coming years. The regression analysis brought out that yield of Bt cotton could significantly be increased by applying more seed, human labour and plant protection chemicals. Hence farmers need to be educated and facilitated on these fronts through appropriate policies to further improve upon the cotton productivity in the state and also to better farmers’ return from cotton cultivation.