In Western Kenya, smallholder dairy production is becoming incrementally commercialized through the commodification and sale of milk through formal market channels. While commercialization is often construed as a way to boost rural livelihoods through increased income from milk, emerging evidence suggests that married women are not directly benefiting from formal milk market participation. This critical issue of gender power imbalance has been framed by development interventions in economic efficiency and social justice perspectives, but thus far interventions in the sector have not addressed how underlying social-market mechanisms embedded in gendered ideology influence smallholder engagement in dairy commercialization. Drawing on feminist theories of power and social embeddedness, this study investigates how gendered power relationships materialize and influence formal milk marketing engagement and practices in Western Kenya. Facilitated discussion groups with smallholder farmers revealed the gendered ideologies and norms that ascribe masculinized meaning to cattle, milk, and commercial enterprise. Key informant interviews with commercial dairy management and farmers were used to identify current practices for increasing women’s formal market participation—namely, direct payments to women for milk deliveries. Findings from this study indicate that cattle and formal dairy market participation are imbued with gendered meaning that create legitimacy around men’s privilege over dairy proceeds. Interventions in the sector aimed at addressing gender power imbalances must acknowledge this dynamic, and accept the social trade-offs and gendered costs of dairy commercialization.