Tobacco has been the most important traditional cash crop in Urambo district since. But 1960s, the production of tobacco in the district has been declining due to world market price. Due to this price decline, farmers have now shifted to paprika production. The economic benefit of tobacco vis a vis paprika production in Urambo district has not yet been exploited. This study describes and analyses two crop production systems namely tobacco and paprika growers. Specifically, the objective of the study are (i) to identify and analyze costs and returns between Tobacco growers and paprika growers, (ii) to compare the contributions of Tobacco and Paprika crops to household income, (iii) to examine the profitability of Tobacco and Paprika production. Purposive and multistage area sampling was used in order to include divisions, wards and villages which cultivate tobacco and paprika, giving a total of 100 interviewees. Primary data for this study were collected by administering structured questionnaires. Secondary data were extracted from reports and documents from relevant institutions and organization such as WETCU and Sokoine National Agricultural Library (SNAL). Two tools of analysis i.e. two independent T-test and Gross Margin Analysis were used. Unit production costs for tobacco was 581 288.52 higher compared to paprika and Paprika production is a profitable enterprise with gross margin of T.shs 250 950 /acre when farmers sell their produce to TSL and T.shs 392 070/ acre if they sell to WETCU. Apart from paprika production and marketing problems encountered, the recommendations are as follows; Increase paprika production, construction of irrigation schemes and establishment of paprika marketing within the study area.Principal Secretary and Director of Marketing, Former Ministry of Cooperatives and Marketing and The Principal secretary,Ministry of Industry, Trade and Marketing