Onion cultivation in Swat Valley, Northern Pakistan, is increasingly becoming important, replacing wheat in the Rabi (winter) season. The area increased from 1000 ha in 1986 to 3000 ha in 1991. Due to its relatively recent importance as a cash crop, information on : (1) management practices, (2) factors determining yields, and (3) the economics of onion cultivation, was hardly available. A diagnostic study organized in 1991 addresses these issues. Its results indicate that onion yields and the economics of onion cultivation are significantly affected by : (1) high seed rates in nurseries, (2) use of poorly drained basin type nurseries, (3) late transplanting, (4) high weed infestation in onion fields, and (5) early harvesting. Despite the 67 % higher input costs, induced by seed rates 20 times higher as usually recommended, onion cultivation in Swat Valley is attractive. Net benefits amount to approximately Rs. 45000 (1800 US$) per ha or 2 times as high as the net benefits per ha of wheat cultivation.