Dairy farming is an important livelihood activity in Odisha contributing to household income and livelihood security. The present study assessed the livelihoods of dairy farmers and the performance of major dairy breeds in the Ganjam Dairy Cluster of Odisha. The study covered five blocks, namely Bhanjanagar, Asika, Polasara, Kukudakhandi and Digapahandi and included 135 dairy farmers from 22 villages selected through a multistage sampling procedure. Primary data were collected using a structured and pre-tested interview schedule while secondary information was obtained from relevant government publications reports and literature. Descriptive statistics, cost and return analysis, Benefit–Cost Ratio (BCR), multiple-response analysis, ANOVA, simple linear regression and Henry Garrett Ranking Technique were employed. The results showed that 57.78% of farmers belonged to the 31–50 years age group, while the largest proportion of farmers (40.00%) maintained medium-sized herds of 3–5 animals. The average herd size was 5.46 animals and average milk yield was 7.03 L/day. Jersey was the predominant breed (65.19%), followed by indigenous cattle (39.26%), buffaloes (32.59%) and HF crossbreds (18.52%). The mean monthly dairy income was ₹36,385 and all herd-size categories recorded a BCR greater than one. Feed and fodder constituted the largest share of production cost (52.24%). Regression analysis indicated a positive but statistically non-significant relationship between adoption of improved dairy practices and milk yield (p = 0.123). ANOVA revealed significant differences in income across herd-size categories (F = 1695.14, p < 0.001). Frequent animal diseases, lack of institutional credit and scarcity of green fodder were identified as the major constraints. The study recommends strengthening veterinary services, fodder availability, institutional credit and scientific dairy management to improve dairy productivity profitability and farmers’ livelihoods.