Context Human–wildlife conflict is a serious impediment to conservation efforts worldwide. This is also true for Bhutan, where dholes or wild dogs (Cuon alpinus), leopards and tigers constitute a menace to the livestock of farmers. Livestock losses as a result depredation by wild animals is a major cause of conflict with farmers, threatening their livelihoods, and causing a negative attitude that can lead to retaliatory killing of wildlife. Aims To survey farmers and document their livestock losses, as well as estimate the value of livestock losses and the causes of predation. Methods We conducted a questionnaire survey of 147 farming households in three zones of the Toebesa subdistrict of Punakha, Bhutan. Respondents provided information on their farming activities and household income, as well as on predation losses of cattle, goats, pigs, chickens, cats and dogs caused by dholes, tigers and leopards between 2006 and 2010. Additional data on livestock populations and losses were obtained from the Renewable Natural Resources Census at the subdistrict. Key Results The results showed that dholes kill more livestock than do common leopards and tigers, the two other known livestock predators in the study area. The annual average number of livestock killed by dholes was 0.19 per household, which is ~2% of the total household income and ~11% of income derived from livestock. Annual income from livestock contributes 21% to the total annual revenues of farmers in the study area. The practice of allowing cattle to freely range, unguarded, in the forest was identified as the primary factor causing high livestock losses to dholes. Conclusions Dholes are the principal predator in the study area and have a significant negative impact on farmers’ livelihoods through loss of income. Our findings that livestock depredation by dholes was significantly less inside the villages and on farmed plots than in the forests showed that the problem can be addressed by improved husbandry practices. Implications To reduce livestock depredation by dholes, incentives or strategies should be investigated for encouraging farmers to let their livestock graze inside and around villages, which includes stall feeding and tethering, and to cooperatively shepherd them in the forests during the day.