Participatory varietal selection in a development project in western India showed that the rice (Oryza sativa) variety Kalinga III was highly preferred by farmers. The spatial diffusion of this variety from three villages (two project and one non-project) was studied. Seed of Kalinga III had spread from the three villages in 1994 to 41 villages by 1996 and is estimated to have reached over 100 widely distributed villages by 1997. Farmer-to-farmer spread was as high from the non-project case study village that received no further seed from the project, possibly because farmers are more likely to spread seed of a new variety to other farmers when they have no assured supply. Project interventions used key villages, informal-sector seed merchants, and Non-Government Organizations in the spread of seed. The project also collaborated with Rajasthan State Agricultural University and Kalinga III has been proposed for release in that state. A financial analysis revealed the very high internal rates of return that are possible from investment in participatory varietal selection.