This paper explores factors that determine farmers’ participation in groups in Mbozi district, Tanzania. Cross-section data used were obtained from face-to-face interviews from a sample of 310 households and 21 farmer groups. Analysis was done by using non-linear logit model and Instrumental Variable. The findings show that type of group, trustworthiness, transaction cost, marital status and the kind of institution initiating group formation are significant determinants of farmers’ participation in groups. The results further show that the average expected income accrued from group participation is Tanzanian Shillings 87,768 more than that obtained by nonparticipants.