Cotton is the most important fiber crop of Pakistan. It is an input intensive crop but it is inevitable for the textile sector of country. About 60% of the imported pesticide is applied to cotton crop that disturbs the ecosystem by polluting natural resources. Similarly, there is intensive use of fertilizers and irrigation water. Realizing the fact that production of cotton in Pakistan poses a serious threat to environment, WWF-Pakistan, in collaboration with IKEA, launched ‘Pakistan Sustainable Cotton Initiative’ (PSCI) in 2005 to motivate the farmers for Better Management Practices (BMPs) through intensive training. Cotton is the source of income for millions of farmers and any cotton related intervention directly affects their livelihoods. In this context, the main objective of this research was to analyze the sustainable cotton initiative in Punjab, Pakistan with a livelihoods perspective. The PSCI was launched in five cotton producing districts of Punjab province. In the present study two districts, Toba Tek Singh and Bahawalpur were selected purposively because these districts had maximum concentration of registered farmers under Sustainable Cotton Initiative. From each district, one tehsil was selected purposively. From selected tehsil 10 Learning Groups (LGs) were selected randomly. From each LG, 20 farmers were selected randomly; thereby making a sample size of 400 respondents. Both quantitative and qualitative methods were used to collect data. The quantitative data were analyzed by using Statistical Package for Social Sciences (SPSS) while qualitative data through content analysis technique. Kirkpatrick model was used for impact evaluation and livelihood framework was used for livelihood analysis. The results revealed that majority of the respondents were literate and smallholders having land less than 12 acres. The awareness level of farmers about the use of pesticides, water saving methods and use of organic fertilizers increased after joining SCI. There were positive changes in learning and reaction of respondents towards training but due to limitations of credit facilities, unavailability of botanical pesticides, no additional price for sustainable cotton and non-availability of alternative pesticides and approved seed, the sustainability remains in question. Following Kirkpatrick model, the analysis indicated that a significant majority of the respondents joined SCI and received training. Significant paired mean differences about the awareness of harmful and beneficial insects of cotton showed the positive impact of training. Farmers used to control the insect/pests of cotton with chemicals before training by applying chemicals at various crop growth stages (vegetative, flowering, and boll formation) but after training substantial percentage of them started to use botanical (neem extract, dhatora extract), cultural, and mechanical methods. Similarly, a majority of the respondents were not aware of precautions while spraying before the training by SCI-LG but after getting training majority of them started precautionary measures during spraying. A majority of the respondents thought that skill about insect pest control had enhanced because of SCI trainings. Slightly less than half of the respondents reported that tendency of disease attack on other crops was decreased and small number of the respondents said that it was increased. More than half of the respondents reported that human and livestock diseases had been decreased due to reduced pesticide use. Results regarding the impact of SCI on livelihood assets showed that skills about insect pest control, cotton picking, sustainable cotton production and water saving practices increased. Social assets of the respondents also increased due to interaction with other farmers outside the village, interaction with Govt. extension field staff and WWF staff. Physical assets of the respondents like land fertility also increased. Yet, financial assets of the respondents remained the same. The results of study demonstrated that such interventions should take care of the local livelihood realities because the farmers of the study area were not getting extra premium for sustainable cotton production and thus their interest was diminishing. The study recommended that WWF should develop proper interaction and linkage among other organization to facilitate the farmers at union council level. Sustainable cotton producers should be entertained with support price and credit facilities. Farmers should be provided alternative pesticides by public agriculture department (Extension) to reduce the use of chemicals on cotton.