The objectives were to examine the gross and marginal production efficiencies in high-yielding dairy cows and the future consequences on dairy industry profitability. Data from 2 experiments were used in across-treatments analysis (n=82 mid-lactation multiparous Israeli-Holstein dairy cows). Milk yields, body weights (BW), and dry matter intakes (DMI) were recorded daily. In both experiments, cows were fed a diet containing 16.5 to 16.6% crude protein and net energy for lactation (NEL) at 1.61 Mcal/kg of dry matter (DM). The means of milk yield, BW, DMI, NEL intake, and energy required for maintenance were calculated individually over the whole study, and used to calculate gross and marginal efficiencies. Data were analyzed in 2 ways: (1) simple correlation between variables; and (2) cows were divided into 3 subgroups, designated low, moderate, and high DMI (LDMI, MDMI, and HDMI), according to actual DMI per day: ≤ 26 kg (n=27); >26 through 28.2 kg (n=28); and >28.2 kg (n=27). The phenotypic Pearson correlations among variables were analyzed, and the GLM procedure was used to test differences between subgroups. The relationships between milk and fat-corrected milk yields and the corresponding gross efficiencies were positive, whereas BW and gross production efficiency were negatively correlated. The marginal production efficiency from DM and energy consumed decreased with increasing DMI. The difference between BW gain as predicted by the National Research Council model (2001) and the present measurements increased with increasing DMI (r=0.68). The average calculated energy balances were 1.38, 2.28, and 4.20 Mcal/d (standard error of the mean=0.64) in the LDMI, MDMI, and HDMI groups, respectively. The marginal efficiency for milk yields from DMI or energy consumed was highest in LDMI, intermediate in MDMI, and lowest in HDMI. The predicted BW gains for the whole study period were 22.9, 37.9, and 75.8 kg for the LDMI, MDMI, and HDMI groups, respectively. The present study demonstrated that marginal production efficiency decreased with increasing feed intake. Because of the close association between production and intake, the principle of diminishing marginal productivity may explain why increasing milk production (and consequently increasing intake) does not always enhance profitability. To maintain high production efficiency in the future, more attention should be given to optimizing rather than maximizing feed intake, a goal that could be achieved by nutritional manipulations that would increase digestibility or by using a diet of denser nutrients that would provide all nutritional requirements from lower intake.