This paper describes the approach being pursued by Agriculture and Agri-Food Canada (AAFC) to develop agri-environmental indicators (AEIs) for Canadian agriculture. The primary focus of the work is on the relationship between primary agriculture and the environment. Environmental sustainability of the secondary (processing) agrifood sector is not being considered at this stage. The demand for AEIs is reviewed and key agri-environmental policy needs, and clients and uses for AEIs are discussed. This is followed by an examination of efforts underway to generate and supply the required information to client groups. Aspects of the overall indicator development approach are reviewed, indicators being developed are described, examples of results obtained to date are presented and general findings and conclusions related to the development of AEIs are summarized.