The world population is expected to increase with corresponding increase in food production and water withdrawals. To ensure continuous food production throughout the year, increasing irrigation is inevitable. However, the water available for agricultural use is inadequate due to the limited water resources globally and climate change challenges threatening water availability. The economy of Mbale, Uganda, mainly depends on rainfed agriculture. The rain season is from April to October whilst the dry season is from November to March. Therefore, this study examines the potential of rainwater harvesting for domestic and agricultural uses in Mbale. The AquaCrop model was adopted for the yield response of crops to water during the dry season. The study reveals that comparing the resulting rainwater harvesting potential with the water consumption, up to 186% of the annual water demand for domestic use, according to the World Health Organization (WHO) standard, can be provided. Thus, the excess harvested water from a 200 m2 rooftop was simulated for irrigation purposes, which shows that it can be used to cultivate areas of 269, 429, 125 and 388 m2 for cabbage, tomato, maize and potato respectively during dry periods. The economic analysis shows a benefit cost ratio of 1.99 over 10 years. It concludes by recommending RWH as an alternative water supply source for domestic and agricultural uses.