Agile methodology is being adopted in software development organization because it helps in different aspect in software development. However, there is the absence of research that has been addressed on the adoption of Agile Software Development methodology in Tanzania. The aim of this is to explore the perception of software developers, teachers and students in software development, computer science and software engineering, determine the factors which lead to adoption of agile methodology plus their perception toward the methodology and lastly examining challenges associated with adoption of methodology. UTAUT Model was adopted in this research. Questionnaire was used as instrument in conduct the research, stratified sampling of 383 respondents was adopted, and analysis of data was done through descriptive and inferential analysis. After data analysis, findings show that 258(67.4%) respondents are aware of the methodology and 125 (32.6%) respondents adopted methodology. More than 50% of respondents revealed that they did not adopt the methodology due to challenges they encountered during adoption. While more than 50% of respondents have positive perception toward agile methodology. UTAUT model was confirmed to be suitable to extract factors which were all statistically significant (p< 0.05). Lastly it is recommended that awareness on agile methodology should be raised to tap its benefits. Furthermore, support should be provided to software developers and students who involve themselves in software development. Moreover, agile methodology should be part of curriculum to software development, software engineering and computer science and IT students.