The status of lobster cage farming was investigated basing on Participatory Rural Appraisal (PRA) at Xuan Dai bay, Phu Yen province. The survey showed that lobster cage farming had the three types: rearing in suspending cages, rearing in settling cages, and combining both the above forms. The experience of farmers from 10 to 20 years accounted for 54%. The number of cages had been increasing significantly. Farmers used live food (such as trash fish, swimming crab, green mussel, and other bivalve mollusc) to feed lobster. Most of the leftover food was not collected ashore. When collecting and analysing the water quality parameters at the lobster farming areas for 12 times during 4 months, the results showed that the water quality, especially in the bottom layer, was getting worse. During the investigation, temperature, pH, salinity, DO were almost stable and within the allowable limits. But the turbidity fluctuated widely from 1st time to 8th time as compared to the other sample collecting times. Ammonia (NH3 ) concentrations exceeded the allowable standard, especially in the bottom. Nitrite (NO2 - ) concentrations tended to rise at the bottom. Nitrate (NO3 - ) levels were almost stable. Total nitrogen in the bottom layer was relatively higher than the other layers; the lowest was 0.1 mg/l and highest was 0.2 mg/l. The dissolved PO4 3- concentration had a large variation in the surface, middle, and bottom layers, and reached the highest in the 4th time of sample collecting. Total phosphorus concentrations at most of the layers were above the allowed standard and evolved in a bad direction.