Agriculture is the backbone of the Sub-Saharan African economy. Ethiopia's GDP is also shared by 45 from the agriculture sectors. However, it is confronted and challenged by variable rainfall and climate changes. Particularly, in South Wollo zone, agriculture is not exceptional in facing such daunting challenges and effects of variable rainfall and climate change despite there are abundant alternative irrigated water resources. River and groundwater sources have not yet been used as alternative uses for agricultural production. As a result, rural households' income couldn’t meet their minimum food and nonfood requirements. This study, thus, attempted to evaluate the impact of irrigated water use on rural household's income in South Wollo Zone, Amhara regional state, Ethiopia. In pursuit of this, it employed a descriptive type of research design and triangulated research approach that consists of both quantitative and qualitative techniques. Primary and secondary data were collected from small scale irrigated households and secondary sources. Binary logistic regression was used to determine major significant factors that affect households' irrigated water use for agricultural production. A propensity core matching model was employed to evaluate irrigated water use and agriculture on household’s income. This study result (binary logistic regression result) showed that the household’s family size, land size and willingness were significant factors that determined irrigated water use for agricultural production at 95 percent level of significance. The propensity score matching model result also shows that irrigated water use significantly created significant impact on household’s income. It is, thus, keenly important to change and improve the smallholder farmer’s land size, extension services, rural credit, technology, education level, awareness about family size, and willingness to use irrigated water sources, such as, ground and river water for agriculture agricultural production that increase their level of income.