Irrigation system is a scare resource in most of drought-stricken Africa.  How to manage and maintain the existing irrigation facilities in Africa is a debatable issue to both policy makers and beneficiaries.  Irrigation facilities run by farmer cooperatives are considered ineffective, unsuccessful and dysfunctional in Tanzania by many researchers.  A cooperative irrigation scheme is a mechanism that features the collective management of rural irrigation facilities by farmers’ cooperative with some government intervention and external support.  There is an increasing emphasis on the roles of cooperative irrigation scheme in the development of the agriculture sector and poverty reduction of smallholder farmers.  In this study, the authors investigated the management and services of this scheme and analyzed its contribution to poverty reduction of smallholder rice farmers and community development in Tanzania through both quantitative and qualitative methods.  The results showed that the scheme helped smallholder farmers increase the rice production and brought better market opportunities.  The farmers’ net income was also increased.  Profit generated from rice farming not only improved the livelihoods of smallholder farmers but also created more employment opportunities in the rural communities.  The research also revealed that the scheme was faced with a number of challenges due to resource and institutional constraints and low-level human capacity for both management and members.  The research provides a feasible approach to effective management of small-scale agricultural infrastructure for poverty reduction in Africa.