Urbanization is a process that grows and expands from time to time alike with the human race settlement first choice. It harmfully affects the world’s massive agrarian community in general and farming community in urban areas in particular. History demonstrates that the human race has altered its settlement patterns by turning vast swaths of rural land into urban areas. In developing countries, this transition is still speeding up, affecting people that rely on agriculture. The goal of this research is to find out how farmers feel about urbanization in the area around Bishoftu. A mixed research strategy was used to gather quantitative and qualitative data for the study. The data was gathered from households in Bishoftu area. Furthermore, data were collected from focused group discussants, key informants interviews, and secondary sources. The key informant interviews and focus group discussions were guided using checklists, while the Questionnaire was used to conduct the household survey. The study employed multi-stage sampling. The first sample, the kebeles were selected using a purposive sampling strategy due to the huge expansion of urbanization in the area. Accordingly, Qajima and Kality kebeles of the adjacent Bishoftu city were chosen. Second, a systematic random sampling technique was used to select targeted households in the selected kebeles. Of the 1254 households of two kebeles, using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula using Taro Yemani‟s (1964) statistical formula ,a sample size of 303 households was systematically selected. The data collected from various sources were managed using Statistical packages for Social Sciences (SPSS version 24). Both descriptive Statistics and Probit Regression Analysis were used for analysis. The finding revealed that the local community was aware of the urbanization and urban expansion projects. The respondents felt that urbanization has good benefits such as job opportunities as well as expansion of basic services such as electric power, health access, transportation, and educational services. Furthermore, they noticed that urbanization has also negative consequences such as the loss of social bonds, cultural identity crises, loss of previous livelihoods, agricultural land loss, pollution, and challenge of housing for the youth. A further probit regression analysis indicated that landholding, livestock holding, and distance from the urban center were significantly and negatively correlated with the perception of households towards urban expansion. However, family size, level of education, and non-farm income were significant and positively correlated with the perception of households towards urban expansion. Based on the finding, the study concluded that the majority of households considered urban expansion as an opportunity and supported it positively.The diversification of livelihood strategies suggest to give due attention in promoting farmers’ education through strengthening and establishing both formal and informal types of education. The negative and significant impact of landholding, livestock holding, and distance from the urban center on livelihood diversification suggests concerned bodies to develop appropriate strategies, especially for land resource displaced farmers.