Potato is strategic crop in Ethiopia to improve food security and economic benefit to the country. The value chain of potato in Lay-Gayint district was not developed due to lack of poor market performance. Therefore this study was initiated to analyze potato value chain in Lay-Gayint district, South Gondar zone Amhara region of Ethiopia. The objectives of the study were to calculate benefit share of actors in the chain and to identify market participation decision of farmers and volume of potato marketed. Two-stage sampling procedure was employed to select potato producer households and 248 potato producers were selected by using systematic random sampling technique. Data were collected from multiple sources including potato producers, collectors, traders, processors, and service providers by conducting survey, key informant interview, focus group discussion and personal observations. Descriptive statics and Heckman two stage models were used to analyze the data. The main actors participated in potato value chain were input supplier, producers, collectors, retailers and consumers. The results of the marketing costs, profits and margin analysis indicated that producers incurred the highest production cost and the major share of the benefit from potato value chain goes to producers in both ware (51.4%) and seed (68.4%) potato marketing which implies there is poor marketing performance in the study area. The econometric model result revealed that sex and family size are the significant factors that affect market participation decision of potato producer farmers negatively. Other variables like livestock, annual potato harvest and potato farm experience of households affect positively the market participation decision of potato producers and are significant. The model also indicated that farm area, annual potato harvest, road condition to nearest market, and credit access were the significant factors that determined the amount of potato marketed by potato producers in the study area positively. Therefore focus on promoting farmers to use irrigation in addition to rain fed, empowering women to be participant in the market, and creating aces to credit and road should be taken in to considerations for the potato value chain development. Key words: value chain, potato, market participation decision, actors 1 CHAPTER 1: