A study was carried out in Blantyre, Lilongwe and Mzuzu Agricultural Development Divisions (ADDs) in Malawi to assess the contribution of the dairy sector to household income, food security and wellbeing of Malawians by evaluating the impact of dairy farming on welfare, socio economic status of dairy and non-dairy farmers and factors that influenced adoption of dairy farming. Mean income for dairy farmers was K278, 000 compared to K86, 438 for non-dairy farmers and differences were significant (p = 0.001). 54.4 % of dairy farmers were food secure from own production compared to 33.3% in non-dairy group. Bicycle ownership was 72.2% compared to 50%, radio ownership was 89.4% compared to 61.1% for dairy and non-dairy farmers, respectively. Milk consumption was higher for families participating in dairy farming with per capita consumption of 88.4kg compared to the national per capita consumption of 6.5kgs. The overall mean milk yield was 10.2kg per day, 13.6% of milk was given to the calf, 10.1% consumed at the household and 76.3% sold. The study recommends that development and investment policies in Malawi should put dairy farming as a priority strategy in poverty reduction.