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Land degradation in terms of soil degradation is a major environmental issue posing threat to sustainable livelihood in the semi-arid region of Central Myanmar. However, the studies on soil degradation status and its impacts in this region are very scanty. The objective of this study was to determine the impact of land degradation on crop production both in terms of area and yield in the Dry Zone of Myanmar. Remote sensing and geographic information system-based modelling was utilized to assess and map soil erosion rates. Household survey was conducted to understand the causes of land degradation and its impacts on crop productivity and livelihoods. It has been found out that the current rate of soil erosion ranged from 0 to 114 t ha –¹ yr –¹, and that the average rate of soil erosion increased from 14.2 to 54.6 t ha –¹ yr –¹ over a period from 2000 to 2012. The major types of land degradation were physical and chemical soil degradation. Farmers identified topographic condition, soil types, improper crop management practices and climatic factors as the main causes of soil erosion. The observed crop yields of monsoon rice, groundnut, sesame and cotton in the highly degraded area were 3–12 times lower compared with the yields of these crops grown in less degraded area. Livelihoods of the farmers in the high-degraded area were affected by crop yield reduction, increased cultivation cost and increased uncultivable land area. The impact of land degradation on crop production was dependent on the severity of degradation. This suggests that advanced conservation measures are immediately required and the supportive policy strategies need to be implemented to educate farmers and to strengthen extension services for sustainable land management in the Dry Zone of Myanmar.