Large scale projects such as buildings of irrigation dam can bring significant benefits to therncommunity by enhancing their resilience to natural shocks including climate change.rnHowever, they could affect the natural and social environments and cause further devastationrnfor local livelihoods unless managed properly. To this end, an assessment of the effects ofrnresettlement schemes and the environment on the livelihoods of project affected households duernto Ribb irrigation dam had been conducted. The Dam is located in South Gondar zone Ebnatrnand Farta woreda, Amhara regional state in Ethiopia. The purpose of the irrigation is tornimprove irrigation facilities in order to enhance crop production by providing stable waterrnsupply to agricultural production. The study used the new environmental setting, socialrninterference, capability to generate income plus building assets, and resettlementrncompensations as inputs to understand how livelihood sustainability of the Project affectedrnpeople (PAPs) affected. This study is based on the 115 of the 227 project affected householdsrn(PAHHs) that have been displaced by the construction of Ribb Irrigation Dam. Data wasrncollected using pretested questionnaires. The data was analyzed using Statistical Package forrnSocial Sciences (SPSS) version 20 and Microsoft Excel. Assessment result of the livelihoodrncondition of project affected households (PAHHs) reveals that only 6.96 % of the PAHHs havernaccess to all the basic services including clean energy, clean water supply, sanitation, roadrnaccess, school, finance, market access and due compensation with 100% of this promisingrnresult belonging to male-headed households.Relationship between income generation activity,rnand socio-demographic characteristics (age, sex, family size, education and marital status)rnshow positive correlation with sex and marital status of the family head being significant. It’srnalso noted that connection between compensation negotiation and compensation fairness isrnmajor demonstrating partial negotiation process. Hence, it’s concluded that almost all of thernhost community are leading unsustainable livelihood. To make matters worse, vulnerablerngroups such as women are excluded from livelihood opportunities. Therefore, it’s herebyrnrecommended that the government and development partners closely monitor the impact of anyrnlivelihood restoration programs that focuses on project affected households. Transparency,rnpublic participation and inclusiveness, equity and rule of law, and accountability are requiredrnto ensure sustainable livelihood of the host community.