Cultivation and production of opium in Afghanistan have skyrocketed since the Taliban were toppled in 2001 such that Afghanistan now supplies 92 percent of the world’s illicit opium. The expanding opium trade is threatening to destabilize the Afghan government and turn the conflict-ridden country back into a safe haven for drug traffickers and terrorists. This paper examines the nature of the opium problem in Afghanistan and analyzes the allied strategy to counter this growing crisis. In analyzing the current counternarcotics strategy, it points out pitfalls including the counterproductive aspects of opium eradication. Finally, changes to the strategy are proposed, which include increasing troop levels and eliminating national restrictions, substantially increasing financial aid, deemphasizing opium eradication, focusing on long-term alternative livelihoods, aggressively pursuing drug kingpins and corrupt government officials, and exploring the possibility of Afghanistan’s entry to the licit opium market.