ABSTRACT This study was undertaken for the purpose of filling the information gap on the contribution of micro credits on women empowerment. The study was conducted in Dodoma Municipality and a total of 81 respondents out of 104 were covered including SEDA Branch manager, 40 SEDA- supported and 40 control group women. The study used Case study and Causal-comparative design of research and respondents were obtained through purposive sampling technique. Analysis of empowerment based in three variables namely; social, economic and psychological. Quantitative and qualitative data were collected through interview using structured and unstructured questionnaires. Findings have shown that participation of women in microfinance programmes has been a best mean of empowering them. It has helped them increase their monthly income and contribution to household income. It has also increased women’s ability to acquire and own assets and their freedom of making decision on the use of income earned from their business. However, it was found that there is no significant increase in women’s awareness of injustice. This was reflected by their subordinate position in intra-household decision making and failure to participate in activities aimed to raise their awareness of injustice. Also study found that SEDA has not enabled women to participate in trade fairs and business associations which denies their chance to gain skills to improve their business. Women’s level of education, poor perception of clients toward micro credits provided by SEDA as service instead of loan; and change in municipal by- laws and regulation which affect women’s markets and hence loan repayment as challenges facing SEDA towards empowering women. This study recommends on integrated empowerment approach so as to help women improve their business and social welfare in general, to be employed by SEDA in providing its service to women.