This paper provides a detailed overview of the current situation of the coffee sector in the Rwandan economy and identifies the possible challenges that the sector is currently facing. The study has identified the economic and the livelihood indicators for farmers who are engaged in coffee production and also gives the Rwandan coffee sector’ situation and its position in the global coffee market. Also, the research has found out that in Rwanda, nearly 500,000 farmers produce coffee along with other crops, notably beans, savory banana and corn and found out that in 2012, coffee accounted for almost 30 percent of Rwanda’s total export revenue. On the other hand, the study revealed that the sector throughout all the coffee production process, has undergone different challenges especially climate change as it is reported by the Ministry of Agriculture and Animal resources. A low yield was reported in 2007 and climate variability was quoted among the causes. Insufficient rainfall in the last three months of 2006 (the period of coffee flowering) proceeding the short dry season in the first two months of 2007 was recorded. The reduced rainfall was also poorly distributed across coffee growing regions in Rwanda. In addition, the research revealed that even though the area under coffee production is increasing, the coffee production is decreasing due to unexpected climate change and variability in current years and also the improper use of chemical fertilizers by coffee farmers is very critical. The study concluded that adding value to the coffee supply chain of Rwanda is adding direct economic benefits and important indirect social benefits to the lives of individuals and to the health of communities in Rwanda. Moreover, more effort should continue to raise the profile of the Rwandan coffee sector suggesting that proper use of chemical fertilizers, solid marketing channels and climate change adaptations measures would be the fair ways of making the sector more profitable and considering national targets to increase coffee export revenues, a few simple measures to improve the performance of the sector could have substantial effects on the country’s economic growth.