Dairy cooperatives play a vital role to dairy farmers in overcoming production and marketing risks, enhancing milk output, and improving dairy farm income. However, evaluation of the determinants and impact of dairy cooperative membership on dairy farm income in Ethiopia was limited. Therefore, this study aimed to identify the determinants of dairy cooperative membership and its impact on dairy farm income in Bahirdar Zuria District. Secondary data were collected from the district and kebele level agricultural and cooperative offices, published and unpublished documents related to dairy cooperatives. Primary data were collected from 400 households using a three-stage sampling technique from four sample kebeles. Descriptive statistics and econometric models were used to analyze the data. Double hurdle model was used to analyze determinates of dairy cooperative membership and intensity of participation in milk supply, and endogenous switching regression model was used to analyze its impact on household dairy farm income. The result of the first double hurdle model (probit) revealed that age, number of crossbreed cow ownership, having member neighbors, off-farm activity, frequency of livestock extension contact, and access to dairy production training were positively and significantly associated with dairy cooperative membership decision. Conversely, distance to the district market and distance to the dairy cooperative affected the dairy cooperative membership decision negatively and significantly. The truncated result indicated that age, education status, number of crossbreed cow ownership, off-farm activity, input availability, frequency of livestock extension contact, dairy production training, and having neighbor dairy cooperative members significantly and positively affected dairy cooperative members’ intensity of participation in milk supply. Whereas, distance to the district market and distance to the dairy cooperative was affected negatively. The endogenous switching regression model result showed that the dairy farm income of treated (members) households increased by 9,007.85 ETB due to membership. Untreated (Non-members), dairy farm income could be increased by 6,960.95 ETB if they had been members of the dairy cooperative. Members got 24% more dairy income than nonmembers; which implies dairy cooperative membership has a positive and significant effect on dairy farm income. Therefore, development and extension institutes needs to focus on promoting dairy cooperatives membership. In addition, improving artificial insemination or supply of affordable cross-breed heifers, market or value chain support, and expansion of veterinary service are very important to advance the dairy sector and increase the income of dairy farmers in the study area and other areas with similar contexts. Impact on households’ nutritional and welfare is also advisable for future research.