Napier grass stunt disease (NSD) has been a major challenge to sustainable smallholder dairy production in Kenya. A household (HH) survey was conducted using personal interviews to assess the effect of NSD on level of milk production and on milk income at household level in Bungoma District, Western Kenya. Data were collected using structured questionnaires in a cross-sectional survey involving 130 respondents in five selected divisions of the larger Bungoma District. Descriptive statistics were used to assess farmers‟ opinions on the extent of NSD infestation on farms. Cobb Douglas (CD) two stage least square (2SLS) model was used to determine the effects of NSD and other variables on the yield of milk. A log linear regression was used to determine the effects of NSD and other variables on the household milk income. Descriptive results indicate that there was an average drop from two cows to one cow that could be fed on an acre of Napier. The CD 2SLS results show that the area under Napier had a positive significant effect on the area of Napier grass under the NSD. Furthermore, NSD had a significant negative impact on milk yield (p<0.05). Gender, farming experience, and alternative sources of feed were found to have a significant negative influence on milk yield. Prevailing market milk price and number of cattle had a positive influence on milk yield. Napier stunt disease had a significant negative impact on monthly gross margins (GM) per cow (p<0.05). The estimates in Kshs were 4325, 4122, 1433, 2689 and 1782 for Kibabii, Sang‟alo, Bumula, Malakisi and Webuye, respectively. The GM estimates were also influenced by other household characteristics such as HH size, push pull practice, land under Napier grass, milk output, and milk prices all of which had a positive impact. The study provides useful information about the effects of the NSD on small scale dairy production and on specific socioeconomic parameters that farmers, extensionists, researchers and policy makers can use in designing appropriate interventions towards mitigating the negative effects of NSD on overall dairy productivity.