Tanzanian fishing coastal communities live on fishing activities as one their major economic activities, practicing fishing on shallow coral reefs areas whereby about 70% of fishery is artisanal. Improper use and overexploitation of fishery resources have resulted in damaging the coral reefs and the subsequent low quality catches. This study aimed at examining the impacts of coral reef fishery decline on rural livelihoods with an emphasis on food insecurity, alternative capabilities and activities on coastal communities of Kilwa district, Tanzania. Data collection methodology included household questionnaire survey, key informant interviews, participant observation and photographing. The survey was based on a sample of 90 households, randomly selected from three villages. The findings attest for a gradual reduction in fish catches over time, brought about by natural and anthropogenic impacts. Overfishing, use of illegal and destructive fishing methods, as well as extreme weather conditions, all threaten the sustainability of marine resources, particularly coral reef fishery that constitutes an important source of food and livelihood. Following the results and as a way of lessen the current pressure on marine resources and diversifying livelihood capabilities we recommend introduction of mariculture and modern farming technologies especially on green vegetables on farms that can potentially be irrigated. The study further recommends establishment of a marine protected area and; in addition, the need to promote educational programs on environmental and resources uses as well as application of active restoration protocols for damaged coral reefs.