The main objective of this study was to assess impact of Micro and Small business entrepreneurship on poverty reduction in Ibadan metropolis, South Western Nigeria. The study population was drawn from a register of relevant trade associations and published government documents, which yieded a total of 383 enterprises. The study used proportional sampling method. The main Statistical tool was the Counterfactual or Difference-in-Difference model of impact assessment. With exp (β3) = 1.385, the empirical results indicated that the odds of individuals in micro and small business entrepreneurship in Ibadan metropolis to earn more than US$1.25 per day increased by 39 %. The study found that the impact could have been more pronounced but for some socio-economic, infrastructural and management challenges. Study recommends strengthening of youth entrepreneurship, increased publicity of government Business Development and Support Services, liberalization of access to and usage of business premises, reduction in cost of production, improvement of infrastructural facilities among others. Key Words: Entrepreneurship, Micro and Small Enterprises, Counterfactual Model, Poverty Reduction, Nigeria, Informal Business Sector.