This paper describes the production practices of paddy in two distinct growing environments in hills of Uttarakhand where average productivity of paddy is not only lower but also stagnated from several decades. Analysis revealed the cropping pattern, characteristics of farming system and households, cost and returns, extent of adoption of improved paddy varieties and constraints in their diffusion in hilly district Almora. Data on different aspects of paddy cultivation were collected 60 randomly selected farmers from two villages namely: Adhuria and Balai from Almora district. Descriptive statistics were applied and tabular analysis was done to ascertain the mean, average, percentage values of collected data. Paddy was the major cereal in the surveyed area during kharif season and it accounts 89.53 and 10.47% area to total cropped area in marginal and small farm size, respectively. The majority of farmers belong to marginal category that was 93.33 and 96.67% to total farmers in terrace and valleys environment, respectively. On the other hand, very poor proportion of farmers falls in small category i.e. 6.67 and 3.33% in the respective environments. The total cost of cultivation of paddy was Rs.49806/- on marginal and Rs.46042/ha on small farm which is at par with gross returns. The average annual income of households in valleys was Rs.116547/- which was 69% higher as compared to terraces Rs.68934/-. Further research should be initiated to improve the productivity of paddy and its profitability; therefore, livelihood of farming community could be strengthened in the hills.