The study was conducted at Bahi District to assess contribution of paddy production toward annual household income among smallholder paddy producer. The study had three specific objectives, to determine level of paddy production at Bahi district, to determine household income earned from paddy and other sources and to analyse factors affecting paddy production among smallholder producers. Data were collected through interview, observation, focus group discussion and documentary review. Both descriptive and inferential statistics were adopted during data analysis.  Finding from the study showed that average land used in paddy production by smallholder paddy producers is 2.75 acres with an average production of 934.75 Kg of rice per acre in 2014 season. The average annual income earned from paddy production was Tsh 1,980,885 and contributed 34% to annual household income among smallholder paddy producers. Extension services, credit accessibility and use of agricultural inputs were major factors observed to affect paddy production. However, smallholder paddy producers in Bahi have not yet utilized agricultural inputs effectively. Extension services provided were insufficient and paddy production in Bahi depends on rainfall from river Bubu catchment areas to facilitate availability of water for irrigation. Therefore smallholder paddy producers should be empowered to adopt modern production techniques include use of agricultural inputs. Government should hire more extension officers to extend extension services for efficient transfer of production technologies. River Bubu catchment areas and banks should be protected by the government and environmental conservation partners to ensure availability of enough water for irrigations in Bahi.

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