A socio-economic survey was conducted in Morogoro Municipality to study the contribution of the small-scale dairy farming to the welfare of the community. The main focus was on the identification of the production level of milk from the dairy cows, amount of income earned by the dairy farmers, items on which income from the dairy enterprise is spent and the constraints faced by the small-scale dairy farmers. A total of thirty seven smallholder dairy farmers from Morogoro Municipality were selected at random and were interviewed using structured questionnaire. Information on daily milk yield per cow and the amount sold by each household was collected through the questionnaire. Information was also collected on the contribution of the dairy enterprise to the family income, level of education of the respondents, employment status of respondents and constraints associated with the dairy enterprise as identified by the farmers. Results from the study show that about two thirds of the respondents had some formal employment and about a quarter (24.3) were involved in business. All the respondents reported the dairy enterprise to be an income supplementing activity to the household. The average milk yield for the respondents ranged between 6-10 litres per cow per day. Average milk production per farmer per day was 22 litres whereas the average daily income earned by the respondents was 3,950/= Tshs. The results from the study show that the dairy enterprise was mainly a male domain (94.6%) whereas only 5.4 percent were women. The major constraints experienced by the respondents in this study were lack of land and high costs of supplementary feeds as reported by 32.4% and 21.6% respectively. Other constraints included, diseases, lack of adequate capital, and theft of animals, milk market and death of animals, which were reported by less than 20% of the respondents. The study observed that income from the dairy enterprise was used to meet costs of various items including; buying food, paying for health services, school fees, purchase of new assets, paying bills for water and electricity and building houses. It can be concluded from this study that small-scale dairy farming has a potential of improving the welfare of households. In order to protect, promote and develop the smallholder dairy enterprise in Morogoro Municipality and elsewhere there is need for the farmers to form co-operative societies, which could assist them to acquire more capital needed in improving dairy production, and also seek markets for their milk. The Government should also improve the infrastructure for milk marketing so that smallscale dairy farming could contribute towards poverty alleviation