This paper explores insecticide use in fields cropped with conventional or Bt cotton varieties in a smallholder farming area (Makhathini Flats, KwaZulu Natal, South Africa). The study was carried out during the 2002-2003 and 2003-2004 growing seasons as part of a broader survey based on daily monitoring of a sample of smallholdings. The adoption of Bt cotton led to a decrease in pyrethroid use, but the level of insect resistance of this cultivar was not sufficient to completely drop this pesticide from the spraying programme. On the other hand, organophosphates were still being applied in substantial amounts, thus raising questions as to the impact of Bt cotton adoption on farmers' health. The overall economic results obtained with Bt cotton were slightly positive despite the low cotton yields obtained in the Flats during our survey. Bt cotton adoption did lead to labour savings, but the extent of this gain was not as high as expected. In conclusion, cropping Bt cotton in Makhathini Flats did not generate sufficient income to expect a tangible and sustainable socioeconomic improvement due to the way the crop is currently managed. Adoption of an innovation like Bt cotton seems to pay only in an agro-system with a sufficient level of intensification.