Drawing upon extensive research in various parts of Andhra Pradesh state in southern India, the present work attempts to assess the impact of the watershed development on rural livelihoods. In the process, the study takes comprehensive look at various aspects of watershed development and management: the policy environment, institutional evolution, implementation modalities, and the impacts. The overarching issues in this regard are the linkages between watershed development and rural livelihoods, the nature of impact of watershed development, and distribution of benefits on the livelihoods of different sections of the community, sustainability of the benefits, and so on. As a result of its findings, the study indicates policy interventions for sustainable livelihoods through watershed development.