M.SC. DissertationContribution of improved charcoal kilns to households’ income is not well documented. This study analysed contribution of improved charcoal kilns to households' income in Kilindi district by focusing on; characterizing charcoal producers, economic contribution of improved charcoal kilns and examining factors underlying the use of improved charcoal kilns. The study used questionnaires and checklists to collect data from 200 charcoal producers. Gross margin was used to analyse the contribution of improved kilns to the household income while logistic model was used to examine factors influencing the use of improved kilns. Descriptive statistics were used to characterize charcoal production kilns and extent of usage. Results indicated that about 40% and 60%of charcoal producers use improved kilns and traditional kilns respectively. The results of profit analysis showed that charcoal contributes about 82% of the total income of the households engaged in charcoal production, followed by on farm activities which contributed about 16%. The analysis further showed that producers who use improved kilns had a gross margin of 62% while those who used traditional kilns had 47%. This implies to every TZS 10 000 sales of a charcoal producers retains TZS 6200 and TZS 4700 as a profits when using improved and traditional kilns respectively. The results further showed that age of a producer, membership to charcoal social networks, level of income, producer training and positive perception towards improved charcoal kilns significantly influence a producer to choose improved kilns in the production. The marital status variable significantly reduces likelihood of producer using improved charcoal kiln. The study emphasises the use of improved kilns to increase efficiency and profit margins since the technology is highly profitable as compared to traditional kilns.