The availability of water through community based water harvesting structure has intensified agriculture and improved livelihood of the surveyed beneficiary households in the Shivalik foothills of India. Before the introduction of Makowal Type Water Harvesting System (before MTWHS), only 83.8% farmers in kharif and 79.7% during rabi season were growing crops but after its introduction (after MTWHS) the corresponding values improved to 100% and 97.3%, respectively, thus increasing cropping intensity from 145% to 189%. Introduction of MTWHS enabled farmers to take paddy and agro-forestry during Kharif, and vegetables and fodder during Rabi season. The increase in cultivated area due to MTWHS was to the tune of 46.1% in Kharif and 36.3% during Rabi, while increase in crop productivity ranged from 55.1% to 111.3% in kharif and 8.6 to 132.0% in Rabi season. Better availability of irrigation changed varietal spectrum in favour of hybrids and high yielding varieties and farmers started adopting improved agronomic practices targeting better input-use efficiency. The MTWHS produced positive impact on the on-farm (crops, dairy and agro-forestry) sources of income and reduced the relative dependence on off-farm activities (labour, community forest area, etc.) for earnings. This system has brought drinking water very close to hutments of rural women thus reducing their drudgery and saving time. In general, rainwater harvesting from forest watersheds has resulted in quantum jumps in crop and milk production and acted as a catalyst to tie up the economic interest of communities, along with forest protection.