Livestock sector is one of the key components of arid agriculture in India. It is an important source of livelihood in Rajasthan for rural masses and generates regular income. Arid Rajasthan which is known as traditional pastoralist region has 29.1 million livestock. During the last two decades the cattle and camel population in the region has sharply declined mainly due to reduction of common grazing lands, fodder deficit, reciuring droughts and government’s neglect. On the other hand the demand for milk, meat and other dairy products has enormously increased. In order to assess the present situation and foresee the avenues for development, district wise livestock data from 1956 to 2007 have been analyzed and various aspects viz. density, grazing pressure, human livestock ratio, fodder situation, impact of drought, veterinary facilities and population trend from 1972 to 2007 are presented. Long term climatic conditions and biophysical resources, key challenges, limitations and potentials of this sector have been brought out. Strategies are suggested for all roimd development of livestock sector.