This thesis is about the competitiveness of handmade silver jewelry industry in Chiang Mai. The purpose of this thesis is to study the production, marketing and exporting structures by using industrial economic theory, to analyze the industry’s competition based on the Diamond Model of Michael E. Porter and SWOT analysis, to use the Cluster concept to increase an export opportunity and competitiveness and to develop strategy for handmade silver jewelry industry in Chiang Mai. The survey indicates that there are about 19 handmade silver jewelry factories in Chiang Mai. This study collected information from 17 factories, all of which are small factories. There are only three factories that produce handmade silver jewelry whereas the other 14 factories produce handmade silver jewelry and handmade silverware. According to the competitiveness analysis of handmade silver jewelry industry in Chiang Mai by the Diamond Model, the advantages of factor conditions are skilled labor and cultural foundation, while the disadvantages are dependency on importing raw materials, low educated labor, lack of designers and technologies. The other advantages of related and supporting industries are the sufficient downstream industries and the supporting institutions, while the disadvantage is the unpleasant of cooperation between the producers and the supporting institutions. The disadvantage of demand condition is the insufficient knowledge of consumers about the handmade silver jewelry industry. The advantages of firm strategy, structure and rivalry are the production strategy, e-commerce strategy and high competition in style and quality, while the disadvantages are the lack of knowledge in marketing, promotion strategy, and attitude in self-development and entrepreneurship. The empirical results indicate that the producers in the handmade silver jewelry industry in Chiang Mai are not gathering together as the Cluster. They are in the same area but the Cluster is underachieved. The producers within this industry do not have close relationship and cooperation among themselves. However, they could develop an effective and sustainable Cluster, if they were to improve and support the activities among the producers. Also the other supporting industries should be together by starting joint activities, they should be a coordinating unit to organize joint activities, to assess self performance, to monitor the progress and to evaluate the Cluster project.