The smallholder irrigation scheme development is seen as an important strategy to transform resource-poor communities by enhancing food security and alleviating rural poverty, which has led the South African government to prioritise and invest significantly in irrigation establishment, rehabilitation, and revitalisation. However, little information is available on the effectiveness and impact of smallholder irrigation schemes in improving rural livelihoods. Therefore, the study aims to investigate the impact of smallholder irrigation schemes on household welfare, specifically on household income in farmer-managed irrigation scheme communities in the Eastern Cape Province, South Africa. Primary data in the form of structured questionnaires was used to collect data from 160 farmers using multi-stage sampling. Descriptive statistics and propensity score matching were used for analysis. The study results reveal that smallholder irrigation schemes can significantly transform smallholder farmers' lives by increasing productivity and providing reliable income from farming. The study found a positive impact and relationship between smallholder irrigation schemes and household welfare in the study. Farm characteristics and socioeconomic and institutional factors influence smallholder participation in smallholder irrigation farming. Based on the results, the study recommends that the government continue investing in irrigation schemes to increase the rural economy, improve rural livelihoods, and attract young people to farming. Department of Rural Development and Agrarian Reform must encourage farmer participation in irrigation schemes and build their capacity through training using agricultural extension agents and subsidising farmers with agronomic practices to improve participation in smallholder irrigation schemes.