Land reform and asset privatization are essential to the transformation of agriculture from a state controlled to privately operated sector and to its future development in a market oriented economy. Although these are necessary conditions for economic development under a market oriented regime, they are not sufficient conditions. In this paper we review the progress achieved in farm restructuring through land reform and asset privatization and the impacts of this restructuring on the structure of farming and production in Lithuania. We then elaborate the main conditions for sustainable agricultural development in a market economy.