The study examined the economic analysis of groundnut production in Biu Local Government area of Borno State. Purposive and random sampling techniques were employed to select 120 respondents. The tools for collection of primary were structured questionnaires. The data were analyzed using both descriptive such as percentage and frequency and inferential statistics. These included percentage, frequency and farm budget model. Gross margin analysis was used to estimate cost and returns from groundnut production in the study area.The study revealed that the average cost of production per hectare wasN55, 228.00. The study further revealed that the average revenue, gross margin and net farm income per hectare were N86, 853.80, N35, 775.00 and N31, 625.00 respectively. The result shows that the return to naira invested was 0.57 which implied that for every naira invested in groundnut production in Biu LGA, a farmer will make a profit of N0.57. The problems encounter by the farmers included lack of capital, lack of improve seed, and lack of extension services. The study concluded that groundnut farming is profitable in the study area. It is recommended that farmers should be encourage to procure their inputs from government agencies, extension services should be made available to farmers to get more profit and improve seed should be made available and affordable to the farmers.