Khat consumption has become a widespread habit with immense socioeconomic and cultural significance in Djibouti. As a cash crop, its production provides an important source of employment and income. Yet, its widespread consumption is of grave concern to policymakers. While the poor health implications of Khat use are well established, its impact particularly on the labor market remains relatively unknown. The present study, therefore, seeks to investigate the relationship between khat consumption and work performance using data comprising, 737 chewers and non-chewers based in six major urban centers of Djibouti. Using an instrumental variable identification strategy, and several econometric techniques, we find a negative and statistically significant relationship between the habitual use of Khat and work performance. The result is robust across all specification, econometric techniques, and even after accounting for the differences across income groups and educational levels. Our findings underscore the need for community sensitization on the negative labor market implications of khat use.