The objective of this study is to assess the practice and impact of the livelihood status of rural farmers in Bahir Dar Zuria Woreda, Amhara region. At the time of expropriation, many farmers of the study area lost their property rights. This is because Bahir Dar city is expanding horizontally and different development investments are being undertaken on lands that were utilized by farmers living in the peri-urban areas of the city. To achieve the overall objective of this study, the researcher employed a descriptive and exploratory sequential mixed method of research design. The type of research approach employed is a mixed approach (both qualitative and quantitative), the sample size of the research were 251 respondents and valuer committee, official experts and different land administrative bodies in this Woreda. The stratified sampling, systematic random sampling, and purposive sampling technique were employed. The findings of the study revealed that because valuers having professional limitations and lack experience; during the time of valuation, the costs of permanent improvements on the farmland like soil and water conservation structures and different crop by-products were not properly valued. Expropriated landholders have got grievances due to different reasons. The Woreda administration did not create and support to create new sources of revenue in the city and did not arrange related jobs or skill improvement training for evictees households’ during that time. For this reason, their level of income has highly declined. Wholly the compensation package was not enough to sustain the livelihoods of the evictees. Expropriation with unfair compensation in this study area leads to economic, social, and moral impacts on the evictees’ livelihoods, and evictees’ household income, social interaction, and mortality decreased from year to year after expropriation. The evictees coped up their life and livelihood by doing as a daily laborer, doing wagon, crop sharing, land renting, small business, and the like. To that effect, the researcher recommended that the government should seriously consider the adequacy of compensation on the sustainability of evictees’ livelihoods and should apply the principle of just compensation in