A study was carried out to assess biofuel production and its influence on improving livelihoods of Jatropha small-scale farmers in Arusha and Rukwa regions in Tanzania. General objective of the study was to assess the Jatropha production as well as the prospective opportunities and constraints to small-scale farmers in Tanzania. Specifically, the study aimed at examines and compare profitability of Jatropha production; assessing factors, opportunities and constraints which influence production; and then analysed seeds oil contents. The data were collected from 186 households in all of the three districts of the study areas. The study results revealed significant differences in income between different cropping systems of Jatropha at p<0.01 level of significance. Independent Samples T-test and the total factor productivity test results revealed that living fence has higher performance than in other production systems. There was also a significant difference (p < 0.01) in the gross margins between mono-cropping, intercropping and living fence systems. Maize and beans, which were intercropped with Jatropha, showed higher gross margins than that of Jatropha. The results of regression analysis indicated that extension services, household size, production systems, and the age of Jatropha plants have positive impact on agricultural productivity. Seeds oil contents ranged from 25.54% to 30.17% and living fence system showed higher percent of oil contents than the rest. The costs of production were relatively higher in mono- cropping and intercropping than in living fence. Farmers faced challenges as having a limited good agronomic practices, processing equipments and skills for processing Jatropha seeds. Access to credit and working capital were other challenges that farmers face in the study area. Multiple use of Jatropha such as provision of energy sources, charcoal, fertilizer, soap making, money by selling seeds are opportunities found. It is therefore recommended that further research on Jatropha value chain be conducted before extensive cultivation of the crop is embarked upon to avoid the conflicts of interest.