This study is about trade liberalization and entrepreneurship in the small-scale garment sector. The study aims at identifying some of the entrepreneurial responses to opportunities and constraints of trade liberalization by micro and small garment producers in Nairobi. The study is based on the hypothesis that trade liberalization created both challenges and opportunities in the business environment for micro and small garment producers in Nairobi. The study hypothesis is that the producers were entrepreneurial in the Schupeterian sense, in response to the constraints and opportunities created by trade liberalization. It is on this basis that the study uses the Schumpeterian theory of Entrepreneurship, to identify the entrepreneurial strategies used by the producers to adjust to the new business environment. This study uses the case study and qualitative methods, in data collection and analysis. Semi-structured interview guide was used in the in-depth interviews with purposely selected eight Micro small garment producers and four key informants. Primary data are supplemented by secondary data, and qualitative methods are used in the data analysis. The study reveals that trade liberalization created both negative and positive effects on the business environment for micro and small garment producers in Nairobi. The negative effects are seen inform of the competition and low demand for local products, occasioned by the influx of new and used clothing from foreign countries. Trade liberalization presented export opportunities to the producers, in which they could export their products to the foreign countries.