India’s efforts to increase food grain production have been achieved through promoting large-scale crop intensification by extending the area under irrigation. The expansion of irrigation has resulted in several undesirable environmental consequences and there is a growing need for a shift in strategy to foster greater environmental sustainability and still meet the economic demands of small producers. A micro-level study was undertaken in one of the important river irrigation systems of Southern India – the Tambiraparani River command area – with the objective of assessing and comparing the sustainability of diversified and non-diversified rice-based farming systems under assured irrigation. Diversified farms included systems based on rice + dairy, and rice + banana + dairy, whilst non-diversified farms were those planted to rice only, and those planted to rice + banana. To measure the sustainability level of these four different wetland farming systems a sustainability index was developed through the use of indicators for economic viability and ecological soundness. Data were collected by personally interviewing farmers in 30 villages along the river.