This study assessed economics of groundnut production among smallholder farmers in Michika local government area of Adamawa State, Nigeria. Multistage sampling technique which involves purposive selection of Michika and simple random selection of farmers from eight wards was embraced in collecting primary data from 172 farmers using structured questionnaire. The analytical tools used were mainly descriptive, gross margin and regression analysis. The analysis found that groundnut production is profitable with an average gross margin of N97,477.80, total revenue of N167,160, and net farm income of N 94,540.64 per hectare. The regression analysis indicated that Cobb-Douglas production function gave the best fit with R2 value of 0.748, implying that the specified factor inputs in the regression equation explained up to 74.8% of the variation in groundnut output and only 25.2% was accounted for by the random error term. Production inputs such as farm size, labour, agrochemicals, seeds and farming experience were statistically significant at varying levels of probability. This means that any increase in such inputs would bring about increase in groundnut output. Resource use efficiency analyses indicate that the ratios of MVP and MFC in respect to seeds, labour and Agrochemicals were greater than unity and hence were under-utilized by the farmers during production period. Therefore, policies aimed at assigning more production inputs to farmers should be introduce by government in order to enhance farmers' output and profitability.