Higher yields and reduced pesticide impacts are needed to mitigate the effects of agricultural intensification. A 2-year farm-scale evaluation of 81 commercial fields in Arizona show that use of transgenic Bacillus thuringiensis (Bt) cotton reduced insecticide use, whereas transgenic cotton with Bt protein and herbicide resistance (BtHr) did not affect herbicide use. Transgenic cotton had higher yield than nontransgenic cotton for any given number of insecticide applications. However, nontransgenic, Bt and BtHr cotton had similar yields overall, largely because higher insecticide use with nontransgenic cotton improved control of key pests. Unlike Bt and BtHr cotton, insecticides reduced the diversity of nontarget insects. Several other agronomic and ecological factors also affected biodiversity. Nevertheless, pairwise comparisons of diversity of nontarget insects in cotton fields with diversity in adjacent noncultivated sites revealed similar effects of cultivation of transgenic and nontransgenic cotton on biodiversity. The results indicate that impacts of agricultural intensification can be reduced when replacement of broad-spectrum insecticides by narrow-spectrum Bt crops does not reduce control of pests not affected by Bt crops.