Polyhouse cultivation of vegetables is emerging as a specialized production technology to overcome biotic and abiotic stresses and to break the seasonal barrier to production. It also ensures round the year production of highvalue vegetables, like capsicum, especially, during off-season. Cost is the major issue in sustaining this technology. The present study examined the economic viability of production of capsicum and tomato in a naturally ventilated polyhouse of medium cost category with drip irrigation system. Data were generated by cost accounting method for estimating the feasibility of production and was analyzed by using project evaluation methods, like Pay Back Period (PBP), Benefit Cost Ratio (BCR), Net Present Value (NPV) and Internal Rate of Return (IRR). Cultivation of capsicum in a polyhouse was found to be highly feasible as reflected in higher values of NPV (Rs.3,23,145/500 m2), BCR (1.80) and IRR (53.7%) with payback period of less than two years. Breakeven price for capsicum production in a polyhouse (Rs.11.80/kg) was lesser than average wholesale price. Production of tomato in a polyhouse was found not feasible, as the breakeven price was more than the average market price and all the project appraisal parameters indicated that it was not feasible. Only at about 48% premium price over the prevailing market price or reduction of cost of polyhouse structure by 60% from Rs.400 to Rs.160 /m2, could make the tomato production viable in a poly house.