Life cycle assessment (LCA) is an acknowledged method to assess the contribution of livestock production to greenhouse gas (GHG) emissions. Most LCA studies so far allocate GHG emissions of livestock to marketable outputs. Smallholder systems, however, provide several products and services besides the production of marketable products. We explored how to account for multi-functionality within the LCA method in a case of smallholder milk production in the Kaptumo area in Kenya. Expressed per kg of milk, GHG emissions were 2.0 (0.9–4.3) kg CO2-e, respectively in case of food allocation, 1.6 (0.8–2.9) kg CO2-e in case of economic function allocation and 1.1 (0.5–1.7) kg CO2-e in case of livelihood allocation. The two Carbon Footprint (CF) estimates of milk production considering multi-functionality were comparable to CF estimates of milk in intensive milk production systems. Future LCA's of smallholder systems should account for multi-functionality, because CF results and consequently mitigation options change depending on the functions included.