Urban expansion-induced displacement is becoming a major concern in Ethiopia, within different parts of the region. Debark is one of rapidly urbanizing town in Amhara region. Therefore, this study was aimed to assess the drivers and impacts of urban expansion on livelihood assets of peri-urban farmers in Debark town. This study was mainly focused on drivers and its impacts on livelihood assets and land use land cover change. Cross sectional survey was applied in three peri urban kebeles of Debark town on 282 (139 displaced and 143 non-displaced) households. The study employed both quantitative and qualitative approach. Multi stage sampling technique was employed to select the study area, kebeles, and sample households. Descriptive statistics, factor analysis, logistic regression model integrated with propensity score matching methods were used to analyze the data. Supervised maximum likelihood classification technique used to map land use land cover change. The results found from key informants indicated that, rural to urban migration, increasing natural population, and economic development were the major drivers of urban expansion. The result found from econometric model showed that the impacts of urban expansion on peri urban farmers’ livelihood assets, natural, financial, and social capital were decreased for displaced households at a value of (-0.443), (-0.172), and (-0.166) respectively, with significant and negative value. In contrary, physical capital for displaced households was increased by 0.177. As a result, the average livelihood assets were decreased for displaced households at a value of (-0.159) and significant at p<0.01 indicates at 1% significance levels. The results from land use land cover detection indicated that in the study periods, the built-up area increased at the expanse of cultivated and forest land by +14.8%, 12.1% and 26.9% with corresponding year 2001 to2013, 2013 to 2021 and 2001 to 2021 respectively. Finally, the study recommends that, the urban expansion program should be based on the consideration of livelihood asset of peri urban farmers’ analysis before expansion.