Background: Thabdi is a milk-based sweet delicacy, produced and consumed widely in the Saurashtra region of Gujarat State. It is characterized with brown colour, granular texture and caramelized flavour. Peanuts being globally popular oil seed crop is considered as good source of fat, protein, carbohydrates, essential amino acids, minerals and other growth-promoting elements. In present study, peanut was included as ingredient for development of milk-based peanut thabdi. Methods: Brief method of milk-based peanut thabdi preparation included heat desiccation of milk till pre-pat formation stage, further heating with clarified milk fat (ghee) to get desired granular texture, followed by heating with added sugar and roasted peanut powder till desired brown colour is obtained. Fat/solid-not-fat (SNF) ratio of milk, peanut and sugar levels were optimized using response surface methodology. Result: The fat/SNF ratio of milk 1.11, 21% heat-treated and ground peanut (% w/w of milk solids, dry basis) and 80% sugar (% w/w of milk solids, dry basis) level were found to be optimum with a desirability of 0.92. Optimized thabdi samples indicated better acceptability with overall acceptability score of 8.54±0.03 compared to market samples. The product remained acceptable on 21st day with overall acceptability score of 7.21±0.10, when packed and stored at 7±2°C.