rrigation has immense potential to improve agricultural production and increases the incomes of rural households. However, its potentials and contributions are not well documented in research studies. The current study tries to assess the irrigation farming practices and its contribution to rural livelihoods in the Koga Irrigation Project in the northwestern highlands of Ethiopia. The study was based on survey of 97 irrigator and 80 non-irrigator representative farm households systematically selected from a total of 4864 total households found on three sites of the project area. To achieve the objectives, household questionnaire surveys, key informant interviews, observations and focus group discussions were conducted to collect data at household level. Data were analyzed using descriptive statistics, independent t-test, chi-square test and the multiple regression models. The results show that over 98% of the irrigators used furrow systems. The average annual net income for irrigators and non-irrigators were Ethiopian Birr (ETB) 22686 and 6016, respectively. Annual household incomes of irrigators were higher than the incomes of nonirrigator households. Irrigation schemes enabled farmers to increase household incomes and crop yields, to minimize crop failures, to enhance productivity and improve rural livelihoods. The majority of the farmers reported that irrigation has helped them to diversify their products, to get diverse food supplies, to have more employment opportunity and to improve their nutrition and health status. Agricultural inputs such as chemicals, seeds, fertilizers and marketing constraints are hindering farmers’ irrigation farming practices in the study areas. Farmland size, crop income, family size, off-farm income, livestock income, and farming experience significantly influenced the annual income and livelihoods of irrigators in the study area. The study recommended that agricultural inputs such as chemicals, seeds, fertilizer should be accessible to farmers as well as improve marketing conditions and marketing chains. Household assets should also gain due attention by the farmers themselves so as to enhance their household incomes and livelihoods.