This study examines rural households’ livelihood diversification strategies in Libo kemkem District South Gondar Zone, Ethiopia. Data were gathered employing a household survey conducted on 180 sampled households using a semi-structured household survey questionnaire. Focus group discussion and key informant interviews were also conducted to gather information on the major determinants factor and major type of livelihood diversification strategies. Multi-stage sampling techniques were used to select the study area and sample respondents. The alternative livelihood strategies used by the study households were agriculture alone, agriculture + off-farm, agriculture + non-farm, and the combination of agriculture + off-farm + non-farm activities. Descriptive statistics indicate that more than half of sample respondents (61.1%) pursue agriculture alone and agriculture + off-farm activities such as selling of firewood, charcoal and wage labor, agriculture + non-farm activities such as selling of food and a local drink, petty trading, hand crafts, and combination of agriculture + off-farm + non-farm comprise 8.3%, 27.2%, and 3.3% of households was used as livelihood strategies respectively. Multinomial logit model was employed in identifying the determinants of rural livelihood diversification strategies. From 14 hypothesized explanatory variables, seven variables were found to be a significant in determining the diversification of households’ livelihood strategies. The higher total annual incomes of household, number of household size, and access to credits have positive effect on choice of livelihood diversification strategies. However, the research result revealed that farm land size, access to fertilizer, access to training, and distance from the nearest market have bottle-necks for livelihood diversification strategies. Therefore, to solve these problem policy makers should give due attention and incorporate determinant factors of livelihood diversification in planning rural development strategies and policies. Micro finance institution should be integrate and facilitate access to credit and training create awareness for the rural households’ livelihood diversification. Keywords: livelihood, livelihood diversification strategies, rural household, multinomial logit, on-farm, non-farm and off-farm 1 CHAPTER