Wetlands in most parts of the world are under threat of over-exploitation, loss and/or degradation partly due to agriculture and urban land uses. Yala swamp, the largest fresh water wetland in Kenya measuring about 17,500 ha supports a large biodiversity and is source of livelihoods to communities around it. This study addresses the situation where part of this wetland is converted into large-scale agriculture by a multinational company, Dominion Farms (K) Ltd resulting into a conflict and controversy amongst key stakeholders. The study sought to investigate livelihood impacts this transformation has for the local community. It employs the concepts Stakeholder Analysis (SA) and Sustainable Livelihood Approaches (SLA) to asses the livelihood situation in terms of socio-economic conditions, rural infrastructure, income diversification, food security and environmental issues. Data and information have been obtained from primary and secondary sources through field survey at the Yala wetland, in which randomly sampled small-scale farmers, fisher folk, Dominion employees, local leaders and informants, traders and other stakeholders were interviewed using questionnaire and other participatory methods. The main questions were designed to gain information about historical use of the wetland, changes in livelihoods and wetland before and after entry of Dominion Company into the area. From the study, it is evident that assessment of the key stakeholders in relation to this natural resource is of utmost importance for mapping out an acceptable management strategy for the wetland. Besides being cause to a conflict and controversy over control of and access to the swamp, the conversion has resulted into both negative and positive short-term and long-term livelihood impacts to the local community. The wetland being a contested resource with multiple users who claim a stake on it requires a holistic approach in its management that caters for divergent needs and views of key stakeholder groups. The study identifies management issues and proposes abroad vision for the future including recommendations for planning as well as suggestions for specific research needs that should form the basis of action