Based on a survey involving 245 small cotton farming households from 6 counties in Hebei province ,effects of using Bt cotton and non -Bt cotton varieties was analyzed. Costs and profits of using different Bt cotton varieties with different gene sources and those of using different filial generations of seeds were also compared. The results showed that in the years of 2002 and 2003 , yields and profits were increased with the application of Bt cotton varieties despite of the increase in costs of pesticides, seeds and in overall costs. Yields with F1 seeds of Bt cotton varieties were higher than those with F2 and F3 seeds, while there was a variance in the differences of profits between using various filial generations of seeds between the two years.