Gastrointestinal nematode parasitism is the most important disease affecting livestock production systems in developing countries, particularly small ruminant production systems. Of particular importance are infections with the strongyle Haemonchus contortus. Integrated disease control strategies are required, including improved management, nutrition and wise use of anthelmintic chemicals. Increasingly, selection of sheep or goats for improved nematode resistance is viewed as a valuable option to complement other control measures. Breeding for resistance is possible because of the existence of extensive genetic variation in resistance, both within and between breeds of sheep and goats. Such breeding schemes are most likely to be based on choice of appropriate breeds adapted to the local environmental conditions, followed by phenotypic selection for resistance. Goal and selection objective traits are likely to include performance (e.g. growth rate) under conditions of parasite challenge, faecal egg count (FEC) and measures of anaemia. With current technologies, genetic markers are likely to be too expensive and logistically difficult to incorporate into breeding schemes in tropical or developing countries. Genotype by environment interactions may be expected, particularly when comparing animals in environments that differ in the extent of parasite challenge or differ in the quality of available nutrition. However, there is no reason to expect antagonistic genetic relationships between performance and resistance, and selection indices should be readily constructed that improve both performance and resistance. If FEC is decreased, then pasture contamination should also decrease, leading to additional benefits for all sheep grazing the same pasture. Finally, breeding for nematode resistance should lead to lasting and sustained improvements in resistance or tolerance. There is no empirical evidence to suggest that nematodes will evolve rapidly in response to resistant hosts, and mathematical models based on genetic and biological principles also suggest that resistance should be sustainable.