Potato production is expanding rapidly in developing countries, particularly in Asia. For many poor farmers potatoes represent a staple food and an important cash crop. Potato insect pests have a substantial negative impact on the livelihood of farmers. Bt potatoes have been effective on a commercial scale in controlling Colorado potato beetle in North America. Small-scale tests have demonstrated Bt's efficacy in controlling potato tuber moth. Reliance on chemical pesticides can be reduced and/or replaced by pest-protected potato, genetically engineered to express genes from the bacterium Bacillus thuringiensis (Bt). Reductions in insecticide use would provide significant economic, health and environmental benefits. Unintentional Bt gene escape into wild relatives of cultivated potato should be rare and unlikely to persist. However, a monitoring system should be in place in areas where sexually compatible relatives of potato occur. The potential of Bt varieties to displace land races or reduce crop genetic diversity should be addressed by the creation of sanctuaries or germplasm banks. Because farmers in developing countries exchange their seeds and mandatory labeling would likely exclude small-scale farmers, Bt genes should be introduced only into varieties handled through the formal seed systems, providing the basis for a variety-based system for segregating genetically engineered (GE) and non-GE produce. We conclude that properly managed Bt potato technology offers substantial benefits for developing countries.