A Dissertation Submitted in Partial fulfillment of the Requirement for the Degree of Master of Science in Development Policy (MSc. DP) of Mzumbe UniversityThis study was conducted in order to examine the potentiality of onion production to poverty reduction in Ruangwa District. The study aimed at addressing the trend of onion production, magnitude of poverty in the study area, the market potential of onions and limiting factors facing onion production in the study area. The study involved 127 respondents selected randomly or purposely to meet the study objectives. The data were collected using interview and administration of questionnaires. The study showed that onion production is a potential activity in poverty reduction to farmers engaged in onion production. This was revealed by existing market potential, income obtained from sale of onions and its expenditure. Despite of this potentiality of onions to poverty reduction, its production was not consistent as there was rise and fall due to market fluctuation, frequent climatic change, high prices of agricultural inputs as well as application of poor farming methods. That is why people decided to produce other crops in order to reduce the magnitude of poverty. The income obtained ranged between 100,000 to more than 500,000 Tshs and expenditure priorities included health (21.1%), education (36.6%), purchase of building materials (22.5%), acquisition of furniture (18.3%) and other uses (1.4%). Hindrance to onion production was also caused by existence of different challenges such as lack of extension services (26.8%), low level of farmers’ education (19.7%), presence of poor roads (14.1%), poor farming methods (7.0%), poor agricultural tools (1.4%), unreliable market (18.3%), lack of government support (9.9%) and other (2.8%). From these findings, it was concluded that onion production has high potential to poverty reduction though it was still not delivering its full potential to poverty reduction. Therefore, the study recommended that there is a need for the government and other stakeholders to ensure that there is a reliable market, prices of agricultural inputs are reduced and ensure that cooperative societies operate to safeguard interests of onion producers. There is also a need to improve delivery of extension services and quality of roads. These measures in turn can increase opportunity to onion producers to earn more income at household and national levels as well as sales of onion in the foreign market.