This paper addresses debates around women's income-generating projects, proposing a theoretical framework which analyzes their effectiveness and limitations in improving women's welfare. The discussion identifies conceptual problems of informal sector theories, arguing that analysis of formality and informality is most relevant at the transaction level. A review of theory suggests the particular significance of informality in women's lives and work. Informal rules and norms impact the transactions between women's productive activities and their environment, specifically the availability and costs to women of labor time, skills, productive assets, credit, organization, and marketing. The conclusion draws out some implications of this analysis for the design of programs promoting women's productive projects.