This study was conducted in Kasulu district with the aim of assessing the impact of a dairy cattle project on the households’ livelihoods. Muzye and Mnanila wards were surveyed. Purposive, stratified and simple random sampling techniques were employed to obtain the desired sample. Data were collected through a cross sectional survey from a sample of 120 respondents, 60 of whom had received dairy cattle and 60 without dairy cattle. Questionnaires for respondents with and without dairy cattle were used to collect data. Data were analysed using the Statistical Package for Social Sciences (SPSS) version 16 computer program. Descriptive statistics, multiple linear regression and t-test techniques were used to analyse the data. A t-test showed a significant difference (t=2.978, df =59, p<0.05) between households’ incomes before and after the project intervention. The mean annual incomes for dairy cattle owners increased from 471 266.67 to 1 012 400.00 TAS after the project intervention. In addition, farmers with dairy cattle had higher mean annual incomes (1 012 400.00 TAS) than those without dairy cattle animals (523 596.67 TAS). Integration of dairy and crop enterprises increased crop yields due to the application of cattle manure. Farmers with dairy cattle (93.3%) reduced application of industrial fertilizers after dairying compared to 51.7% of households without dairy animals. The observed overall mean cow performance in terms of daily milk yield, lactation length and dry period were 7.25kg, 9.08 and 2.65 months, respectively. It was concluded that small scale dairy cattle enterprise had contributed significantly in improving households’ livelihoods as regards to food security and increased purchasing power of goods and services. It is therefore recommended that guaranteed milk market, quality extension services and access to quality dairy animals will sustain the project. This calls for development partners to support farmers through small scale dairy schemes.Belgian Technical Cooperation (BTC)