Management reforms are considered one of the best alternatives in increasing efficiency of the irrigation systems. Transfer of day-to-day operation and maintenance to farmers is not a new concept. However due to lags, even now it is a hot issue in developing countries and Nepal is not an exception. In this context of growing argument about the transfer of management of public irrigation systems to the Water Users' Group, this paper examines the comparative performance of farmer-managed and agency-managed irrigation systems. Khageri Irrigation System in the Chitwan district of Nepal was taken as the study site where complete management transfer has been done in 1996. The situations before and after complete transfer were compared. Intensive case studies of the selected farmers showed that equity in distribution of water and leakage had significantly improved after management transfer. Logit analysis revealed that age and education level of the household head, distance from main canal, leakage of the canal and equity in distribution are significantly related to the satisfaction level of the beneficiary farmers from FMIS compared to AMIS. However, landholding size of the respondent farmer has no significant effect. Similarly results from t-test revealed that rice productivity and overall profits from agriculture has also increased significantly due to irrigation management transfer.