Very little is known about the use of antibiotics on small dairy farms in lower/middle-income countries. The use of these drugs can have profound impacts on animal health, farmer income and public health. A survey of 156 farmers was conducted in Cajamarca, a major dairy-producing center in the highlands of Peru characterized by small farms (<15 cows) to assess patterns and determinants of antibiotic use and farmers' knowledge of antibiotics. The reported incidence of disease on these farms was relatively low (0.571 episodes of disease per cow-year), but more than 83% of the reported episodes were treated with antibiotics. The most commonly used antibiotics were oxytetracycline, penicillin and trimethoprim-sulfamethoxazole drugs; antiparasitic drugs were also used to treat what were likely bacterial infections. An increased incidence of treated disease was significantly associated with smaller farm size, lower farmer income, the previous use of the Californian Mastitis test on the farm and antibiotic knowledge. Farmers' knowledge of antibiotics was assessed with a series of questions on antibiotics, resulting in a "knowledge score". Increased knowledge was significantly associated with the use of antibiotics for preventative reasons, the purchase of antibiotics from feed-stores, the experience of complications in animals after having administered antibiotics, the number of workers on the farm and the educational level of the farmer. Overall, antibiotics appeared to be used infrequently, most likely because therapeutic interventions were sought only when the animal had reached an advanced stage of clinical disease. Few farmers were able to define an antibiotic, but many farmers understood that the use of antibiotics carried inherent risks to their animals and potentially to the consumers of dairy products from treated animals. The results of this study are useful for understanding the patterns of antibiotic use and associated management, demographic and knowledge factors of farmers on small dairy farms in rural Peru.