The growth of the population of Addis Ababa from about 2.1 million in 1994 to about 2.7 in 2007 (or 2.1% annually) has been occurring mainly in horizontal growth in peripheral areas. Many farmers in the peri-urban periphery have been dispossessed of their agricultural lands, the basis of their livelihoods. A multi-method data collection approach incorporating household survey, participatory group discussions and key informant interviews was used to assess this process of urbanization and the changing livelihoods. We found that the city’s expansion program is neither participatory nor supportive to farmers in the periphery, and thus has negative effects on peoples’ livelihoods where women and the youth are the major victims. The main coping strategies of the majority of the displaced farmers are casual daily labor, since other more productive opportunities have gradually become unavailable in the area. Future urbanization programs will need to be more comprehensive and participatory to ensure a transition to more stable and improved livelihoods.