For Australian and New Zealand dairy farms, the primary source of home-grown feed comes from grazed perennial pastures. The high utilisation of perennial pasture is a key factor in the low cost of production of Australian and New Zealand dairy systems and, hence, in their ability to maintain international competiveness. The major pasture species used are perennial ryegrass (Lolium perenne L.) and white clover (Trifolium repens L.), normally grown in a simple binary mixture. As pasture production has been further driven by increasing use of nitrogen fertiliser and irrigation, farms are getting closer to their economic optimum level of pasture utilisation. Increasing inputs and intensification have also increased scrutiny on the environmental footprint of dairy production. Increasing the diversity of pasture species within dairy swards presents opportunities to further increase pasture utilisation through additional forage production, extending the growing season, improving forage nutritive characteristics and, ultimately, increasing milk production per cow and/or per hectare. Diverse pastures also present an opportunity to mitigate some of the environmental consequences associated with intensive pasture-based dairy systems. A consistent finding of experiments investigating diverse pastures is that their benefits are due to the attributes of the additional species, rather than increasing the number of species per se. Therefore, the species that are best suited for inclusion into dairy pastures will be situation specific. Furthermore, the presence of additional species will generally require modification to the management of dairy pastures, particularly around nitrogen fertiliser and grazing, to ensure that the additional species remain productive and persistent.