Irrigation plays an imperative role in agriculture production and productivity growth. The present study is an attempt to realize the goal of assessing impact of small scale irrigation project on rural household’s income. It was conducted on Kashu irrigation project located at Shey Bench district, Southwest Ethiopia. A Cross-sectional data was collected from 264 households (128 irrigation users & 136 non-irrigation users) of Bata Kebele of the district for estimating the results using econometric models. To this end, several variables were used to determine household’s probability of participation in irrigation use. The decision to participate in irrigation was significantly influenced by irrigation experiences, frequency of extension contact, access to credit services, distance to nearest market and training access. The estimated results via propensity score matching (PSM) estimation technique indicated that the average income of irrigation user’s household is significantly higher than nonusers by birr 2460.70 (US dollar 70.40) per year. Our analysis also shows that the Radius (Caliper) matching with a bandwidth of 0.25 is considered as best estimator for quality matches based on the criteria of (balancing test=12, pseudo-R2 = 0.065 and matched sample size=226). Based on these findings, it is recommended that strong markets infrastructure; better extension service, effective farm training system may have the potential to attract the farmers in to the irrigation project.