Incorporating perennial grasses such as bahiagrass (Paspalum notatum Fluegge) to diversify the conventional two‐crop rotation of peanut (Arachis hypogaea L.) and cotton (Gossypium hirsutum L.) prevalent in the U.S. Southeast (SE) is advocated. However, little is reported on growth and development for cotton grown in rotation with perennial grasses. Our objectives were to compare plant characteristics including height, leaf area index (LAI), chlorophyll meter readings (chlorophyll index), N uptake, weed densities, and residual soil nutrients in a conventional rotation of peanut‐cotton‐cotton vs. a bahiagrass‐bahiagrass‐peanut‐cotton rotation. Field studies were conducted in Quincy, FL from 2000 to 2006. Plant height, LAI and N, P, and K uptake were generally greater for cotton in the bahiagrass rotation compared to the conventional cotton/peanut rotation. Weed densities were reduced for cotton in the bahiagrass rotation. Residual nutrients at the end of the season including N, P, and K and soil organic matter (SOM) showed no differences between the rotations. In spite of the improvements in plant growth characteristics, rotating cotton with bahiagrass overall did not improve yield above the conventional rotation. Potential exists for greater cotton yield in the bahiagrass rotation once effective management practices have been identified.