Taking of agriculture as the sole means of income generation activities is difficult to lives of rural households. This is because diminishing returns of productivity over time. Due to this factual reason, focusing on livelihood diversification in off-farm and non-farm activities as a primary or supplementary source for rural household’s livelihoods becomes vital. The main purpose of this study was the assessment of rural households’ livelihood diversification in off-farm and non-farm activity to support households’ livelihood in Fogera district, north western Ethiopia which is mainly dominated by rain fed agriculture. A cross-sectional study design was used. Data were collected from randomly selected 192 households by using semi-structured interview seclude and key informative interview guides. The descriptive statistics was used to identify challenges and types of off-farm and non-farm activities. Similarly, inferential statistics such as independent sample t-test and chi-square test were applied to identify association and relationship among diversified and not diversified groups. A binary logistic regression was used to identify determinants of households in engaging diversified income generating activities. Results from descriptive statistics indicates that lack of knowledge, lack of capital, lack of market information, lack of credit access and lack of infrastructure were the wellknown identified challenges in the study area. Because of these challenges, only 28.6 percent of the household engaged in diversified household livelihood diversification activities. The binary logistic regression result revealed that educational status of rural household heads, access to training, access to credit, and household size were significant determinants influenced livelihood diversification of households. From this study the basic factors which influenced the livelihood diversification activities were household’s demographic and institutional characteristics plus challenges in related to knowledge, information, capital and access to infrastructure to engage in diversification. Thus in improvement of education in sustainable way, creating on credit access, easily accessing market information, providing training in relation to income generating activity and ensuring infrastructure service facility are the most imperative tools for rural households to participate in off-farm and nonfarm activities. KEYWORDS: Diversification; livelihood; farming; off-farm, non-farm, income generating