The present paper is the result of a study concerning the sheep production system in a less favoured area in Epirus-Greece. This system is a semi-extensive one and is based on the exploitation of local natural resources. It is characterised by small size farms with an excessive fragmentation, ageing of the active rural population, degradation of communal pastures and a high proportion of leased arable and pasture lands. Factors such as the upgrading of sheep and goat flocks and mechanisation of agricultural work mainly in the plain zone as well as a greater use of purchased concentrates and hay, have led to a greater degree of intensification of the sheep production system in the target area, with a corresponding decrease in dependence on natural resources. The development of the agricultural system would be based on the necessity of more rational exploitation of local natural resources - including off farm activities - in the framework of sustainability on the one hand and of the guarantee of a reasonable standard of life to the area's rural population on the other.