A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OFARTS IN RURAL DEVELOPMENT OF SOKOINE UNIVERSITY OF AGRICULTURE.MOROGORO, TANZANIA.A study was conducted in Mufindi district to determine the production performance and contribution of dairy goats to income of small-scale farmers. Purposive sampling was employed to select eight villages from five wards, and a sample of 80 dairy goat farmers and another set of 80 non-dairy goat farmers. The farmers were individually interviewed using a structured questionnaire. Non-dairy goat farmers were included as a control to ascertain the effect of dairy goat production on household income.Theresults show that keeping dairy goats is very important as it was found to play multiple roles to the households’ needs such as providing milk for home consumption (42.5%), household income (47.5%) and manure(10.0%).The dairy goat breeds kept were Toggenburg and Saanen. Average milk yield recorded from the two dairy goat breeds was 171.4 ± 8.89 litres per goat per lactation. Toggenburg dairy goats had slightly higher milk yield with a mean of 171.6 ± 11.9 litresper lactation compared toSaanen dairy goats which had a mean lactation yield of 171.3 ± 12.6litres. The mortality rate for Toggenburg kids (45.9 ± 4.4%) was relatively higher compared to that of Saanen kids (39.6% ± 4.8).The results also show that the mean total income obtained from dairy goat enterprises was TZS 197 897.49 ± 23 699.29 per year and accounted for 26.2% of household income.Apart from keeping dairy goats farmers got income from other sources such as crop production, other type of livestock species and doing small business. Diseases, lack of concentrate feeds, few breeding bucks, higher price of inputs and inadequate extension services were the major constraints faced by small-scale farmers in the study area. It is recommended that production performance of dairy goats should be improved through improving management practices in terms of feeding, breeding and disease control.