The study on which this paper is based assessed livelihoods of smallholder farmers in Ihemi cluster. Specifically, the study looked at the identification of institutional factors governing the use of water and land resources, determinants of the factors influencing male and female-headed households’ income inequalities, and lastly, the comparison of agriculture production between male and female- headed households. The methodology involved a cross-sectional research design with a sample size of 150 households. Purposive sampling technique was used to select Ihemi cluster among other clusters of the SAGCOT intervention and stratified sampling technique was used to select respondents. The main method of data collection used were a structured household questionnaire- based survey and focus group discussion. Descriptive statistics, multiple linear regression and independent T-test statistics were used to analyze the data. Descriptively, majority (66.7%) of the respondents in Mufindi and Wanging'ombe district were married followed by Kilolo (56.7%). Very few respondents (3.3%) in Iringa district were single and very few had divorced (3.3%) in Mufindi district. Further, findings indicate that the number of Female Headed Households (FHH) is slightly higher in Njombe district (46.7%) followed by Kilolo (43.3%), Iringa district (40%), Wanging'ombe (36.7%) and relatively less in Mufindi (33.3%). The compounded independent T-test for mean production difference revealed that, there was a significant difference in production scores for male-headed households (M=12.4, SD=9.1) and that of female-headed household (M=9.4, SD= 7.8) conditions; t (142) = -3.233 and p=0.002, indicating significant indifference between male and female-headed households in the cluster. Furthermore, multiple linear regression model revealed that land ownership, access to credit, number of livestock owned, household education level and household size were found had significant influence on male and female-headed households’ income inequalities. On the institutional factors, water sources such as shared taps, private owned taps, wells covered are for domestic purposes only while water sources such as streams, springs and rivers can be used for domestic purposes, livestock watering, watering gardens and irrigation. With this, general hygiene should be maintained and agreed contribution for maintenance in case of breakdowns. The study recommends that, diversification of income sources between female headed households and male headed households should be encouraged, fostering of community- investor linkage and increase access and control over natural resources such as land to female- headed households who are important actors in agriculture in rural areas as thy depend on land for their livelihoods. Conclusively, at the household level, female-headed households should have the same access to productive resources as men, they could increase productivity significantly. Women are good drivers for change towards more sustainable production system.