Soil erosion due to traditional mode of farming is considered a serious environment constraint to agricultural and rural development in Manipur state, north east India. This paper attempted to study the impact of Khamenlok watershed project on changes in land use pattern, cropping pattern, income, employment and equity of the households in the watershed. The study indicated that the watershed project altered the land use system favorably to horticultural crops mostly fruits with little attention to the development of field crops and livestocks including fisheries. The project could increase the income and employment opportunities of the households in the watershed. However, the most crucial thing is that this increased income was not distributed uniformly to all sections of people in the area satisfactorily. It necessitates proper attention to the landless, marginal and small farmers while planning for watershed development projects. Self employment schemes such as village level small scale industries, post harvest technologies and value addition, livestock and poultry etc. need to be developed

Keyword: Land use pattern; Cropping