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One of the challenges of perishable vegetable production is selecting appropriate market outlets to deliver the produce fresh and earn better price. Various factors affect producers’ decision to choose among the alternative market outlets. This study was aimed to identify determinants of smallholder vegetable producers’ decision on market outlet choice and verify the existence of difference in productivity and income of households among different market outlets in Lake Tana basin, Ethiopia. Using primary data collected from a survey of 385 farmers in three districts located in Lake Tana basin, the study estimated multivariate probit model to explain the factors that influence market outlet choice of smallholder vegetable producers. F-statistics was sued to verify the effect of market outlets on productivity and income. The results show that those households choosing both farm gate and local market simultaneously are found at better level of productivity and income. Multivariate probit results show that buyers visit and age of household head simultaneously determined all market outlets decision of producers. Those households visited by buyers at farm or village were found more likely to choose farm gate and roadside market outlets and less likely to sell the produce at market place. The implication is that as far as smallholder producers had access to alternative market outlets, they would earn better income by choosing appropriate combination of market outlets. Interventions that improve access to all market outlets could improve income and boost production of vegetables.