The study examines the impact of Fadama II on poverty reduction in three states of Nigeria: Imo, Ogun and Kaduna states. The Fadama project had the primary objective of sustainably increasing the income of its beneficiaries; be it pastoralists, hunters, gatherers, crop farmers and livestock owners. The study examines the extent to which Fadama II project impacted on the poverty level of the beneficiaries in the three States Three hypotheses were postulated to guide the study. The study made use of interviews, observations and questionnaire to obtain primary data necessary for the study. Secondary data was derived from Fadama II documents obtained from Federal, State and Local Fadama desk offices between 2004 to 2009. The theory of participation was used as theoretical framework to lend credence to the adoption of the CDD approach used by Fadama II project as implementation strategy. As a result of the study, we found out that Fadama project recorded successes in increased income, increased food production and group dynamics. But the project would have done better if not for obvious challenges like the requisition for counterpart fund from the poor, timeframe of the project and lack of feasibility studies on the characteristics of the beneficiaries. In view of these challenges we recommend among other things; an alternative to counterpart funding, the need for feasibility studies and emphasis on sustainability of poverty reduction efforts