Technical Abstract: Genetic improvement of dairy cattle involves determining which improvements are desirable, which traits provide information on the goal, how heritable those traits are and how to evaluate them, and how to design a breeding program to achieve the goals. This book chapter describes how to determine which goals should be established in order to emphasize profit or efficiency as the ultimate goal of the dairy enterprise. The traits typically measured are listed along with how they are related and the genetic parameters utilized in the selection process. Evaluation procedures used to establish genetic rankings are derived from observations on related animals and are reviewed. Scientific innovations such as artificial insemination, marker assisted selection and cloning are reviewed as well as their effect on design of breeding programs. Rapid progress in genetic improvement of dairy cattle has been achieved in recent years. This progress has resulted from a focus on yields of milk and components, the traits of primary economic importance. The investment of producers in milk recording and of artificial insemination organizations in testing a large number of young bulls each year has been an important contribution to this success. Data collection is somewhat easier with dairy cattle than with some other farm species because of the intensive nature of production and the relatively high value of the individual animals. This situation has lead to a highly developed system of data collection, genetic evaluation, and young sire development. Future developments in marker-assisted selection, evaluation methods, and breeding plans hold promise for further increases in the rate of genetic improvement.