The present study was carried out in North Sinai region. Data were collected as part of the project "Multinational approaches to enhance goat production in the Middle East" sponsored by MERC, USAID. Three goat production systems were identified according to water source and type of feeding or grazing: (i) the extensive rain fed one (S1); (ii) the semi intensive rain fed one with animals receiving supplementary feeding besides grazing (S2); and (iii) the intensive irrigated one (S3). The study was carried out on 234 farms during the agriculture year 2001-2002. Data were statistically analyzed to test the effect of production systems on two economic indicators: Internal Rate of Return (IRR, %) and return per animals (RPA) per LE. Statistical analysis showed significant (P<0.01) effect of production systems on these economic indicators. A Linear Programming (LP) model was used to optimize gross margin of each system. The optimal LP suggested for S1 system an increase grazing area from 18 to 24 feddans (1 feddan = 4 200 m2 ) and herd size from 20 to 30 heads. In S2 the suggested increases in these two parameters were respectively from 8 to 12 feddans and from 29 to 40 heads. The largest income was noted when the herd size was maintained at 70 heads in S3. It could be concluded from the LP model that both grazing area and available cash resources were the limiting factors rather than labor. Goat activities contribute substantially (14-25%) to the total farm gross margin.