Analysis of production efficiency of rice cultivation of Wet Rice Cultivation (WRC) in Dimapur and Wet Terrace Cultivation (WTC) in Phek district of the state of Nagaland revealed that, WRC under Dimapur district experienced the highest productivity than WTC under Phek district. The reason for higher productivity for WRC when compared to WTC is due to the better use of seeds, fertilizer, machines, and availability of irrigation facility which had a great impact on production and productivity. Both the farming systems in the two districts are labour intensive and the average labour absorption per acre in Phek district is 41.57 labour man days whereas, in Dimapur district it is about 43.9 labour man days. Result from Cobb-Douglas production function shows that capital plays the predominant role in production in both the districts. The study is based on primary data and the data was collected from 300 household from the two districts and three villages each district using a pre-tested interview schedule. The period of the study was the crop year of 2016-17. The study was found that the cost of production is high in case of small and medium farmers, while the profit rate was high for marginal farmers showing inverse relation between farm size and profitability.