I study how firms diversify through M&As from a learning perspective. I find that firms start with small acquisitions to learn about a new line of business and then decide whether to further pursue the diversification strategy through subsequent acquisitions. Further, a firm’s propensity to start with small acquisitions is positively related to the uncertainty regarding diversification synergy and target valuation, and is negatively related to its own industry competition. Additionally, the outcome of initial small acquisitions positively affects the probability that the firm makes subsequent acquisitions in the new industry. Finally, I find that the subsequent acquisition performance of a learning firm is better than the counterfactual performance if it did not choose the learning approach. My results suggest that a firm’s decision to learn is optimally determined by the trade-off between the benefits and costs of learning, and firms who choose to learn indeed improve the performance of their subsequent diversifying acquisitions.