Livestock play a significant role in rural livelihoods and the economies of developing countries. They are providers of income and employment for producers and others working in, sometimes complex, value chains. They are a crucial asset and safety net for the poor, especially for women and pastoralist groups, and they provide an important source of nourishment for billions of rural and urban households. These socio-economic roles and others are increasing in importance as the sector grows because of increasing human populations, incomes and urbanisation rates. To provide these benefits, the sector uses a significant amount of land, water, biomass and other resources and emits a considerable quantity of greenhouse gases. There is concern on how to manage the sector's growth, so that these benefits can be attained at a lower environmental cost. Livestock and environment interactions in developing countries can be both positive and negative. On the one hand, manures from ruminant systems can be a valuable source of nutrients for smallholder crops, whereas in more industrial systems, or where there are large concentrations of animals, they can pollute water sources. On the other hand, ruminant systems in developing countries can be considered relatively resource-use inefficient. Because of the high yield gaps in most of these production systems, increasing the efficiency of the livestock sector through sustainable intensification practices presents a real opportunity where research and development can contribute to provide more sustainable solutions. In order to achieve this, it is necessary that production systems become market-orientated, better regulated in cases, and socially acceptable so that the right mix of incentives exists for the systems to intensify. Managing the required intensification and the shifts to new value chains is also essential to avoid a potential increase in zoonotic, food-borne and other diseases. New diversification options and improved safety nets will also be essential when intensification is not the primary avenue for developing the livestock sector. These processes will need to be supported by agile and effective public and private institutions.