<p>This study examines the dynamic relationship between market structure, diversification, and firm performance in India. Our objective is to investigate the possibility that market structure might moderate the diversification-performance relationship. We build a panel vector autoregression model (PVAR) for Indian firms over 7 years from 2012 to 2018, under the Structure-Conduct-Performance paradigm. We use the 4-firm concentration ratio and Herfindahl–Hirschman Index to measure market structure, entropy measures of diversification to measure conduct, and Tobin’s Q and Return on Asset (ROA) to measure firm performance. Our study is conducted considering diversification at the group level as well as segment-wise diversification at the firm level. Our study shows that the impact of the market concentration on firm performance is linked to the diversification strategy. High market concentration enhances firm performance with related diversification and reduces firm performance with unrelated diversification. Firm performance is positively impacted by its own lagged values. The firm performance also has a strong positive impact on the Herfindahl -Hirschman index (HHI) in the short run and the influence of Tobin’s Q on HHI persists in the long run. We also find that market concentration is positively influenced by total diversification. Except for unrelated diversification which has a negative impact on Tobin’s Q, the other measures of diversification do not impact firm performance. Therefore, our findings suggest that market structure played some role in explaining the diversification-performance relationship in the Indian context. However, when our study is extended to the segment-wise diversification at the firm level for a few industries, we find that concentration enhances performance and unrelated diversification reduces performance, but it is not significant for most models.</p>