Adoption of conservation tillage for cotton production in South Texas has been slow. Climatic conditions and soil types of South Texas are quite different from the southeast United States where other producers have been successful with conservation tillage cotton. A greater knowledge of the benefits and risks of conservation tillage practices under a subtropical, semi-arid environment producers will help producers make better decision regarding tillage practices. Objectives of this study were to 1) compare the effects of conventional moldboard tillage and conservation tillage on cotton yields and production costs, and 2) provide farmers with guidelines for implementing conservation tillage. Economics of cotton production and lint yields as affected by tillage in a semi-arid, subtropical environment were examined. Six producer fields in 1997 and five fields in 1998 were split, and one-half of each was farmed using conventional tillage practices and one-half of each field was farmed using conservation tillage practices. Seeding rate, fertilizer, irrigation, insect management, and other production factors were the same for both tillage systems. Average cotton lint yields in 1997 and 1998 were 137 and 87 pounds respectively, greater in the conservation tillage than in the conventional moldboard tillage fields. In 1997 five of the six sites had equivalent or greater yields and in 1998 four of five fields examined had equivalent or greater yields under conservation tillage when compared to conventional moldboard tillage. Production costs were $55-65/acre less and net returns in 1997 and 1998 averaged $129 and $118/acre more compared with the conventional tillage methods. Results of this two year study apply to cotton following grain sorghum. Conservation tillage cotton was produced with lower input costs and had equal or greater economic returns than the conventional moldboard plow tillage system.