This paper is based on the study conducted in Dodoma Municipality at Madukani Ward to assess the contribution of petty trade to household income poverty reduction. Specifically, the study examined the nature of business done by petty traders, income and expenditure level of individuals from petty trading and assessed other income generating activities among petty traders. Data for this study were collected using interviews as the method of data collection whereby questionnaires were administered to 110 petty traders who were selected by using both random and purposive sampling techniques. The study involved collection of quantitative and qualitative data which was analyzed through SPSS to obtain frequencies in tables and figures. Qualitative data collected through interview and observation was analyzed by using content analysis. This was to give summary of each topic discussed and identify the content of discussion. The results from the study revealed that petty trade is the backbone of most of the traders as it has shown many changes in the lives of the respondents as they were more able to tackle most of the instances that they could not when they were not engaged in petty trading. The study provides the effective measures to be done in order to improve the status of petty trade.