Abstract: Two chronic and fundamental problems relating to Iranian rural regions are low production and high rate of unemployment. The purpose of this study is to explore the role of productive (producer-owned) cooperatives in raising production and employment opportunities in rural areas of Ilam county, west Iran, from 1983-2003. In order to collect data, surveys were carried out in all productive cooperatives which were active during the research (95 in total). The members of these cooperatives were 805 persons. A multistage systematic technique was used to select 35 members for pre-test. About 20% of the rest of the samples were elected for this research based on the same sampling criteria. A well structured questionnaire was administered for collecting data. For validity and reliability of data, Coronbach Alfa experiment and expert advice were consulted. Data analysis involved the use of descriptive and inferential statistics. It was carried out by SPSS and EXCEL. In the descriptive part, statistical figures such as Frequency, Percentage, Mean were used. In the comprehensive section, T-Experiment (One-Sample Test) was used. To determine a meaningful level of the role of cooperatives in production and generating employment, Co-Relational Experiment, K-Square and the analysis of variance were applied. This study argues that cooperatives have been successful in promoting agricultural production and job opportunities, as well as being effective in improving the economic and social standing of their members. It will be concluded with practical policy guidelines.