Abstract: Tibet is one of the five largest pastoral areas and is also the largest grazing area in alpine meadow grassland of China.The sheep industry has a long history in Tibet and is also an important pillar industry in the development of agricultural and pastoral economy. In the past ten years, the inventory number of sheep in Tibet has remained ten million, accounting for half of the total livestock inventory number in Tibet. At present, in the farming and pastoral areas of Tibet, the whole year grazing is still the dominant mode for sheep breeding, resulting in the poor individual production performance and low ratio of large-scale farming. Currently, there are two major problems in sheep breeding in the Tibetan farming and pastoral areas： one is that the variety of Tibetan sheep has being degenerated, and the other is that the grassland resources for grazing have been severely damaged. This paper analyzes the development status of the Tibetan mutton sheep industry from the following aspects： sheep inventory number, sheep number for sale, mutton production, employees in this industry, mutton consumption and farmland, and summarizes the developmental potential of the mutton sheep industry in Tibet. Furthermore, we put forward some countermeasures and suggestions on promoting the development of large-scale sheep breeding in Tibet.