Chat production expansion is a common phenomenon which has been occurred in different parts of Ethiopia. But, its magnitude and impacts are differing from place to place in response to different compulsion factors. Hence, the issue should be studied in detail for understanding the status of Chat production, for decision making and for filling knowledge gap. Accordingly, this study was focused on the issue of Chat production expansion and its impact on farming system in Bahir Dar city and Bahir Dar Zuria Woreda which is found in Amhara region, Ethiopia. It was conducted with the major objective of mapping and quantifying Chat production expansion from 2001 to 2016. The research was descriptive survey type and was employed both qualitative and quantitative data. Sub pixel and supervised image classification was conducted to reveal the physical expansion of Chat production. For socio economic analysis descriptive statistics and multiple Regression method of statistical analysis were used. The result shows that Chat production expands about 53,552 times in the first study period (2001-2013) and during the second study period (2013-2016) Chat production increased by 26.85 %. The major reasons for this tremendous expansion are the economic importance of Chat for farmers, Chat farmland proximity to the city, sufficient water resource and land fragmentation. It is also discovered that Chat production exerts its own noticeable impact on the farming system. From 2001 to 2016, 76% Chat production expansion is taken place at the expense of cereal crop farm lands. Chat production brought a positive impact on the economy of the farmers, which contributes about 73 % from their annual income. By contrast it also brought its curse to the community. Due to Chat production expansion the average size of cereal cropland has reduced from 0.95 ha to 0.65 ha. Considering the above results, it is recommended that there should be appropriate controlling and monitoring mechanisms for chat production expansion.