An in-depth field survey was conducted on 125 randomly selected urban-based and peri-urban smallholder dairy herds in the Dar es Salaam region of Tanzania. The primary objective was to define the sector in terms of its productivity, constraints and relevance to urban dwellers. Information on such variables as animal management, feeding, housing, prophylaxis and disease history was obtained by means of a standardized interview questionnaire and by cross-sectional inspection of the available farm records. Results show that dairying has led to improvements in dairymen's general welfare: 78% of the respondents indicated that dairying had increased their ability to meet medical and school expenses for their children, while 6% of respondents had used dairy income to invest in more capitalintensive off-farm activities. It was also learnt that the sector had opened up a number of supporting businesses, creating employment for the people engaged in it. However, the dairy sector's potential is limited by a number of shortcomings and specific constraints, which include (among many others) poor nutrition, poor animal health and diseases, lack of finance, transport, skilled labour, processing facilities, storage, marketing and the delivery of advisory and health services. It is suggested that the system would have a more secure future if these technical and socioeconomic constraints were removed through research and technology transfer with appropriate policy support.