This project performance assessment is the first undertaken by the Independent Office of Evaluation in the Republic of Azerbaijan. The North-East Development Project was the third IFAD-funded initiative in the country and was implemented during the period 2006-2011, in a transitional context. The project’s successful introduction of participatory irrigation management to the benefit of 15,000 households was an impressive achievement. It successfully established water user associations and rehabilitated nearly 31,000 ha of farmland. This led to a significant rise in water supplies and improved water-use efficiency, providing a sound basis for introducing higher-value crops, increasing crop yields and expanding livestock activities. At the same time, the project’s investments in agriculture, livestock and marketing were not commensurate with the critical importance of these activities to the livelihoods of smallholder farmers.