Overcoming poverty can be possible through establishing MSEs which is one of thernstrategies adopted in all over the country. MSEs are very essential to create employmentrnopportunities, increase income of households, absorb large labour force, easily adoptedrnand flexible by MSE owners etc.rnThis study investigates the role and performance of MSEs in improving the standard ofrnlife of MSE owners in Gondar Town of Amhara Regional State. The main objective of thernstudy was to assess the role of micro and small scale enterprises in the improvement ofrnthe standard of MSE owners in Gondar town of Amhara regional state. This studyrninvolves 235 questionnaires. In addition, key informant interviews as well asrnobservations were also the other data collection instruments. The questionnaire wasrndistributed to the sample respondents of MSE owners, which are involved in the sector.rnBased on collected data, the researcher identified the role and performance of the sectorrnas well as the challenges encountered to the MSE owners. Thus, the study revealed thatrnthe MSEs sector in terms of employment creation, ensuring their food security, or inrnimprove the life of households become visible and seems potential. It also identified thernmajor determinants of the performance of MSEs, Asset ownership, Income and FoodrnSecurity situation of respondents and the most serious problems of the MSE sector in thernstudy area: lack of capital and credit, lack production and selling space, lack of marketrnfor their products, and dissolving the already established MSE cooperatives etc. In orderrnminimize and alleviate the existed problems, some policy implications are recommended