Access and use of seed of improved varieties of groundnut among farmers can improve farmers’ livelihoods and contribute to the potential of crop production in Tanzania. This paper analyzes factors underpinning the adoption of improved groundnut varieties among farmers to pave the way for upscaling quality seed used for increased production and commodity business in farming communities. A four-stage stratified sampling was used to collect data from 300 groundnut farmers in seven agro-ecological zones through individual interviews. Secondary data were collected from the literature and the Tanzania Agricultural Research Institute at Naliendele centre (TARI–Naliendele). Descriptive statistics and Probit regression model were used for data analysis. The empirical results showed that Johari 1985, Pendo 1998, Naliendele 2009, Mnanje 2009, Mangaka 2009 and Nachi 2015, are the main six improved groundnut varieties used by farmers, with Pendo 1998 having the highest adoption rate (17.1%). In the grain market, four varieties, namely Pendo 1998, Mnanje 2009, Nachi 2015 and Johari 1985, were observed to be highly preferred by grain off-takers. Furthermore, among the adopted improved varieties, Nachi 2015, is observed to be the most consistent high yielding variety, ranging from 1100 kg/ha to 1500 kg/ha in all agro-ecological zones. A farmer’s decision to adopt new varieties is affected by age and gender, farmer group membership, availability of improved seed and seed cost. Overall, male farmers are more likely to adopt improved varieties of groundnut than female farmers. The implications of these findings are also discussed, in particular in the area of policy support.