The sheep sector has immense importance in Azerbaijan, as cattle and sheep rearing are the most preferred and productive livestock activities in the country. The sheep sector is an important source of nutrition (meat and cheese) and livelihoods in rural areas. The sector is currently facing an alarming situation due to the changing demand and supply situation, as further elaborated in the following discussion. In this context, this value chain study has been commissioned under the FAO-Azerbaijan Partnership Project to provide strategic vision and direction to the objective of transforming the sheep sector in Azerbaijan. The insights from the value chain study will help to identify the key areas of interventions to be taken up under the Project and other development initiatives of the government and multilateral agencies.