The study has centered on Fanta Vegetable Producer Cooperatives that is situated in Woreda 4rnof Akaki - Kaliti Sub - City, Addis Ababa. The study explored the practice of urban based smallrnholder farmer's agricultural cooperative in the improvement of the lives and livelihoods ofrnresidents. The study is hoped to improve our knowledge about the role that the sector plays inrncooperative livelihoods, and adds information to the limited researches done so far on the area.rnThe objectives of the study were to explore the experience of urban based small holder farmer 'srnagricultural cooperatives in the improvement of the lives and livelihoods of residents. A fewrnstudies were conducted on the effect of using vulnerable river water but research conductedrnabout the contribution of urban based agriculture to the lives and livelihoods of the cooperativernin the study area are scarce. The necessary data were generated both from primary andrnsecondary sources. The study was based on a qualitative research method, to investigate thernpractice and contribution of urban based agriculture. The study employed case study approachrnto find out the possible alternative opportunities to challenges faced by them throughrndiversifying different types of urban based agricultural products. The study conductedrnexploratory research because it is related and applicable to explore new concepts since arnresearch conducted in this area is scarce.rnThe study has found that vegetable production along Akaki River constitutes the livelihood ofrnFanta agricultural cooperative. Besides, the cooperative has huge potentials of assets that canrnsignificantly impact future development of the area. These assets can be categorized at natural,rnsocial, financial, human and physical capitals. The findings of the study show that the majorrnconstraints of the cooperative are access to land; pollution of Akaki River; flood; absence ofrnurban based agricultural policy; shortage of market outlet chain; and illegal trade. All thesernchallenges need the combined effort of all stakeholders. Hence, awareness building and goodrnlocal environmental governance systems that target all stakeholders should be created to preventrnthe current constraints and sustain the livelihood of the cooperative. As a short-term strategy, itrnis also advisable for the cooperative to use water from the deep well in collaboration with localrndevelopment stakeholders in their vegetable schemes. Moreover, farming in urban environmentrnhas been found to benefit poor households through diversifying different types of urban basedrnagricultural products.