<p>A survey was conducted among smallholder farmers around Lake Mburo National Park, Uganda whose mean household (H/h) size was 5.4 ± 0.2 persons having 40.6 ± 0.5 and 3 ± 0.4 acres of land in Kiruhura and Isingiro districts respectively to determine the impact of drought. Farmers in Kiruhura district were livestock keepers while in Isingiro they were crop growers. In Kiruhura district, during drought periods cattle sale off-take increased 2.3 times, their crude mortality rate increased 1.73 times and prices decreased by 46.8%. For goats, sale off-take did not increase but the crude mortality rate decreased by 47.2% and sale prices increased 2.1 times. Total Gross Output from Agricultural Enterprises (TGOAE) per H/h was USD 17,782.1 and USD 1,762.4 annually in Kiruhura and Isingiro districts respectively, of which 83.8% was from cattle milk output in Kiruhura and 67.6% was from crop output in Isingiro. In Kiruhura and Isingiro the economic cost (EC) due to drought per H/h was USD 10,437.4 and USD 1024.8 respectively which was 58.7% and 58.1% of TGOAE respectively. In Kiruhura, 83.5% of EC losses were caused by milk production losses and 96% were caused by crop failures in Isingiro. The frequency and amount of milk and food consumed was drastically decreased. In conclusion, the study area suffered high losses due to drought with Isingiro experiencing total crop failure. While Kiruhura district encountered more economic losses, it was in a much better position to handle shocks brought by drought because it had diversified sources on livelihoods. From this study it became apparent that both livestock and crop farmers in areas with variable climate in Uganda suffer the brunt of climate change brought by drought. They should therefore be sensitized about urgency and the need to develop and adopt participatory mitigation and adaptive resilience measures to address impacts of drought. Exchange rate: 1 United States Dollar (USD) = 3617 Uganda Shillings (UGX).</p>