Chronic food insecurity is one of the main problems which affected millions of Ethiopiansrnfor centuries. To solve this problem, the government of Ethiopia has been undertakingrndifferent programmes. Though large amount of expenditure was outplayed before 2005, itrnwas unable to solve the problem of food insecurity because it was not provided timelyrnand unpredictable. Moreover it has a dependency syndrome. Thus, due to the limitationsrnof the previous measures, currently different programmes were being undertaken underrnthe umbrella of FSP. PSNP was one of these programmes. It has two components i.e.rnpublic works and direct support. It was aimed at smoothening consumption andrnpreventing assets from depletion at household level and creating assets at communityrnlevel.rnHence, the general objective of this study was to assess and explore different impactsrn(both positive and negative) of PSNP on the lives of the beneficiary households in DerarnMalo Woreda. Both qualitative and quantitative approaches were employed. The datarnwere gathered from 116 household heads through household survey questionnaires, andrnfrom other respondents through key informant interviews and focus group discussion. Byrnemploying these instruments it founded that the programme has both positive andrnnegative impacts.rnThe positive impacts were it smoothened and improved food consumption for those whornproperly used the transfers; it improved household assets and prevented it from depletionrnat household level; community assets were improved and rehabilitated with little qualityrnand ownership problems; and though the number was small, it reduced the number ofrnchronically poor people.rnOn the other hand, the programme resulted in different unintended results. These werernthough seasonal, commodities and goods especially food items became expensive and itrnwas difficult to find food items after the payment of the transfer; some work beyond theirrncapacity especially during maintenance of roads and they face shortage of time for theirrnhousehold activities; it sent some wrong messages to have more children initially;rndiscourage hard work to some extent; confusion over who should undertakerndevelopmental activities; encourage dependency to some extent, and leads to more debt.rnFinally, this work forwards some points which will help to maximize the positive impactsrnand minimize the negative ones of the programme. These are all household membersrnshould be included; the transfer should be able to cover the living costs and fair; thernbeneficiaries should stay in the programme for the stated period; and the payment wasrnbetter if based on the preference of the households. To minimize the negative impacts, thernprinciples of the programme should be properly applied; awareness giving should bernundertaken, changing the cash payment in to different materials if necessary andrnautonomy for DAs