The study assessed the effects of Fadama lll on rural rice farmers in Yola-North LGA of Adamawa State, Nigeria. The objectives are to; described the socio-economic characteristics of the respondents, Estimate the cost and returns of Fadama and non-Fadama participants, to assess the change in output and to assess the change in income among the respondents. One hundred and twenty four (124) respondents were selected from beneficiaries and non-beneficiaries of the project through multi stage and purposive random sampling. Structured questionnaire were used to obtained data on the Socio-economic characteristics, Cost and Returns, Change in output and Change in income. The data were analysed using Descriptive and inferential statistics. The findings reveals that majority of the respondents were males (71.4%) and married (69.6}.These categories of respondents are in their productive ages (30 – 39 and 40 – 49) capable of engaging in farming activities and they account for 64 % whom are the majority. Revenue generated by the beneficiaries is higher than that of the non-beneficiaries as revealed by the Gross margin analysis, likewise the T-test showed the mean Income of the beneficiaries was higher compared to that of the non-beneficiaries even though the difference was not significant at p=0.05 .Despite the fact that the project had made little impact on the living conditions of the beneficiaries, it is recommended that it should be continue in order to ensure sustained income and revenue generation.