A DISSSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN ENVIRONMENTAL AND NATURAL RESOURCE ECONOMICS OF SOKOINE UNIVERSITY OF AGRICULTURE. MOROGORO, TANZANIA.River basin`s resources are vital to basic livelihoods improvement and to the economy growth of the World. Despite the significant role played by river basins to Tanzania`s economic growth, little information is known on the socio-economic effects of river basin in urban areas than in rural areas. To address the information gap, this study was conducted purposely to: identify socio-economic activities undertaken by urban community along Pangani river basin, analyse gross profit from identified socio-economic activities and analyse factors influencing urban community`s dependency on river basin. Purposive sampling was used to select three wards among seven wards crossed by river basin. A cross-sectional research design was adopted where a total number of 90 respondents were randomly selected and interviewed using household questionnaire. Key informant’s informations were collected and three focus group discussions comprising 6-10 people were carried out using a developed checklist. Data were analysed using statistical package for social science (SPSS), gross margin analysis and multiple regression model. The findings revealed that, 33.3% of the respondents were conducting gardening activities, 26.7% crop cultivation, 26.7% brick making, 8.9% sand mining and 4.4% car wash activity. The overall gross profit was found to be TZS 5 263 736.00 per household/year which is higher than that recorded in previous researches conducted in rural areas. Soil fertility, water availability, land availability, access to market, conducive climatic condition and vicinity to new construction area were found to be significant factors influencing urban community to depend on river basin at a 5% probability level (p < 0.05). Generally, the result prevail that, there is high utilisation of river basin resources in urban than in rural areas. The study recommends strengthening of community participation and awareness in conserving the river resources and further study on investigating economic efficiency of socio-economic activities.