Conservation tillage and perennial grass based peanut (Arachis hypogaea L.) production systems are attractive management tools with soil health, pest management and environmental benefits. Because of low returns, the two systems are not as widely adopted in the SE, with less than 2% of farmers growing peanut in perennial grass rotations, but, instead rotating peanut with cotton (Gossypium hirsutum L.). Bahiagrass (Paspalum notatum Fluegge) is a common forage in the southeast which can be grown in rotation with peanut. Field studies were conducted in Headland, Alabama, from 2003 to 2006 to compare crop yields, in the conventional peanut-cotton-peanut (P-C-P) vs. bahiagrass-bahiagrass-peanut-cotton (B-B-P-C) rotations under strip-till vs. conventional tillage. Strip tillage and the B-B-P-C rotation had increased net returns in 2 of 4 years at this site. Strip tillage reduced equipment operating and fixed cost but the savings were more than offset by an increase in herbicide cost. For this site, tillage was the most important factor with conventional tillage being overall superior than strip tillage in yield, revenue and net returns.