ABSTRACT The extent to which small scale irrigation has been able to improve household’s livelihood in the rural areas of Ethiopia is not well understood. Thus, this study focused to examine the impact of small scale irrigation on farmers’ livelihood in Mekdela woreda. The study employed ‘with’ and ‘without’ approach by comparing farmers who used irrigation and farmers who did not use irrigation. Both quantitative and qualitative data types were used for analysis. Stratified random sampling technique was used to select the respondents of irrigation user and non-user households for the survey. Quantitative data for the study were collected from randomly selected 258 farm households were 96 users and 162 non-users using semi-structured questionnaire. Secondary data were collected from different sources. Binary logit ad Endogenous switching regressions model were employed to identify the determinant of small scale irrigation participation and its impact on farmers’ livelihood respectively. The logit model result indicates that age and age square of the household, adult lab our, extension contact, access to off farm income, distance from homestead to nearly local market and distance from home to the scheme are significant factors affect farmers’ decision to practice irrigation. To capture the impact of irrigation on households’ livelihood, in Endogenous switching regressions model, two indicators were considered, that is household total income and household fixed asset formation (evaluated at market price of survey period). The result shows that positive and significant impact of participation in the irrigation scheme had increased irrigation users’ income by 8.5%, and fixed asset formation by 26% as compared to non-users. This shows how significance role of small scale irrigation scheme are in improving the livelihood condition of poor farmers in the study area. The research result also identified problems of small scale irrigation as presence of pests and diseases, lack of access to market, lack of water, and lack improved inputs. The study recommends access to market, extending appropriate crop protection mechanisms, educating and raising farmers’ awareness through extension and provision of other complementary services would enhance the participation of irrigation for livelihood improvement. Key words: Endogenous switching regressions, impact, livelihood, small scale irrigation, stratified random sampling