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The aim of the study was to investigate both environmental and economic performances of Luxembourgish dairy farms in order to assess possibilities and limits of improving economic competitiveness via increasing environmental efficiency. In the environmental field, four LCA impact categories (carbon footprint, energy consumption, acidification, eutrophication) were analysed, while in the economic field, costs, incomes and profit of the farms were investigated. A main result was that a sustainable dairy production with less environmental impact in all considered categories is also of advantage in terms of farm competitiveness. The most efficient farms reach also the highest profit. The case study proves that a high environmental performance is not only of advantage in terms of economic competitiveness, but is even a necessary prerequisite for best economic performances.