Since most dairy production in developing countries comes from small farms, there is scope to reduce their contribution to greenhouse gas (GHG) emissions. In the highlands of Mexico, the limitations in these systems are high feeding costs. This paper assessed the production, economics and estimated methane emissions from traditional feeding strategies (TFS) in 22 small-scale dairy farms compared to optimised feeding strategies (OFS) evaluated through on-farm research in eight participating farms in the dry (DS) and in the rainy (RS) seasons. Results were analysed with a completely randomized design. There were no differences (P>0.05) in milk fat, body condition score (BCS) or live weight between TFS and OFS, but there was higher (P<0.05) milk yield (17.99 vs 14.01 kg/cow/d), energy corrected milk (ECM) (16.77 vs 12.93 kg/cow/d) and milk protein (32.1 vs 30.9 g/kg milk) in OFS than TFS. Profit margin/cow/day was higher (P<0.05) (US$4.42 vs US$2.74) with a lower (P<0.05) feeding cost (US$0.18 vs US$0.22/kg) in OFS than TFS. Environmentally, the calculated enteric CH4 emission intensities were lower (P<0.05) in OFS (19.8 g CH4/kg milk) than TFS (25.3 g CH4/kg milk). Optimized feeding strategies in small-scale dairy farms increase milk yields, reduce feeding costs, increase incomes, and reduce enteric CH4 emission/kg of milk.