Traditionally, poverty was understood primarily as material deprivation, as living with low inrncome and low consumption characterized by poor nutrition, poor living conditions, low health &rneducation level and inability to attain a minimal standard of living. Reducing, if possiblerneradicating poverty is unquestionable. Thus, microfinance programs have been considered asrnone of the main tools in poverty reduction in recent development agenda. It is an importantrneconomic input in the effect to reduce poverty by supporting marginalized active poor of thernsociety. Studying the role of microfinance institution on poverty reduction and improving thernstandard of living is important to assess its viability on poverty reduction and living conditions.rnThe main objective of this study is to find alit whether the provision of microfinance services ofrnMFls in Lemu and Bilbilo has reduced poverty and brought changes all the living standards ofrnclients. So on the light of my research objective; I have developed my research question, whichrnis: What is the role of Microfinance all poverty reduction and uplifiing the living standards of thernpoor people ill Lemu and Bilbilo?rnI consider myself between the Positivist and Interpretive researcher. Because, my main goal isrnnot only to find out the mechanism of microfinance in Lemu and bilbilo, but also to find out thatrnhow this mechanism reduce poverty and helps poor people to improve their living standards as:rnincome, savings etc. By doing so, I believe that it will give me an upper hand, especially when itrncomes to finding answers to the questions raised in the problem statement.rnPrimal), data were collected through close-ended structured questionnaire from clients and staffrnmembers of each institution and semi-structured in rearview with the manager of each institution.rnSecondary data were gathered from different published and unpublished relevant materials. Thernstudy mainly applied analytical approaches such as frequencies and percentages. The findings ofrnthe study indicated that the OCSSCO, PEACE AND BG'S micro financing scheme has improvedrnthe clients 'food security, ability to send children to school, and housing condition.rnKey words: Role, poverty, microfinance, standard of living, poverty reduction.