Conceptually, the benefits of irrigation are realized through improvements in agricultural productivity. At household level, the agricultural production increases could be followed by improvements in income generation and food consumption patterns. The goal of this research was to examine the relationship between irrigation, income generation and household consumption patterns for the rural smallholders with pre-scaling up of onion variety (Allium cepa) of Bombie and Adama Red. A survey was undertaken in 500 households and information was collected on demographics, landholdings and family labor, irrigation, returns of cultivation, consumption behaviors, farmer perceptions and experiences, and other related variables. The results show that using irrigation the Bombie red yield on average was 193 quintal per ha with maturity date of 90-100 days. Though overall production increases the agricultural income of households because the amounts produced directly marketed which increases the household income generation and to spend on food crop purchases for consumption. However better dietary diversity was found on the consumption pattern of the irrigated households with higher income since part of the generated yield was supplied to the surrounding market and to other tertiary markets like Nazareth and Addis Ababa. The average total land holding was found 4.7 ha while the average land cultivated for onion production varies 2.2 to 1.1 ha in Amibara and Fentale districts of the Awash basin areas. Average years of experience of small holder households in using different improved verities were 7.3 in Fentale while 5.1 years in Amibara districts which had good contribution in production management. Producers indicated that every once days irrigated the crop on average in the district. Seedling rate used for onion bulb production was varying 3.8 kg/ha on average depending on the condition of the seed.