The study conducted in Karnataka state with an objective to find out the sources of growth and instability of groundnut production. The CAGR, CDI and Hazel’s decomposition model was used. The growth pattern showed a downward trend along with higher instability in area, production and yield of groundnut in all the districts during period II. The variation in groundnut production was predominantly due to interaction effect of yield and area during period I, whereas change in mean area largely contributed during period II in the state. The change in mean yield, change in mean area, interaction effect and change in residuals had a stabilizing effect on groundnut production. The change in mean yield and change in mean area was primary sources of growth in all the districts and divisions. The study suggests that the research efforts may be concentrated on developing a suitable yield increasing technology in the state like HYV, expansion of irrigation area under groundnut. It helps to enhance the per unit production of groundnut as well as stabilize the area and yield of the groundnut in the state in particular and country as a whole.