Dairy production in the Netherlands is characterized by high stocking densities, high inputs of chemical fertilizer and concentrates and is facing multiple challenges on environment, landscape and welfare issues. This review focuses on nitrate, ammonia and methane emissions, and grazing. Emission reductions from dairy farms over the last twenty years have been realized by a combination of fundamental and applied research and active participation by farmers. An overview of participatory projects in the dairy sector is given. Although emissions of nitrate, ammonia and methane have been reduced in the period 1990–2010, strict environmental targets still have not been met and landscape and animal welfare issues present additional emerging challenges. Fundamental changes in dairy production systems might be needed, and the focus of participatory projects should shift from adjusting existing systems towards the exploration of new production systems.