Stagnant yields of peanut (Arachis hypogaea) and cotton (Gossypium hirsutum L.) coupled with increased production costs prompts the need to re-evaluate the current peanut/cotton cropping system in favour of more diverse and sustainable systems. We introduced bahiagrass (Paspalum notatum) to the current peanut/cotton cropping system to increase yields and reduce production costs. Field studies were conducted in Quincy, FL from 2000 to 2004. The objectives were to compare crop yields in the conventional cotton-cotton-peanut vs. bahiagrass-bahiagrass-peanut-cotton rotations under irrigated and non irrigated conditions. Peanuts yields were consistently higher (up to 1032 kg ha-1) in the bahiagrass rotation compared to the conventional rotation, under both irrigated and non - irrigated conditions. Improved soil conditions coupled with a reduction in diseases when peanuts follow a more effective non-host crop such as bahiagrass contributed to the higher yields. Cotton lint yields averaged 1939 and 1918 kg ha-1 in 2003 and 2004, respectively, and did not differ for the two rotations. Cotton in the sod rotation resulted in almost 50% more biomass and root growth. The resultant rank growth could have affected the cotton yields. We propose to reduce the N rates in subsequent experiments to minimize excessive vegetative growth. This experiment is part of a multi-discipline and multi-state project that is evaluating the feasibility of incorporating perennial grasses and cattle in the traditional peanut/cotton cropping system of the SE.