The population of Ethiopia is growing fast, however; the productive capacity of the land to produce food is limited. The level of participation and contribution of income from non-farm activities to the households’ income is very little compared to the myriad potential of the sector. This study aims to identify the determinants of farmers participation and the amount of income derived from non-farm activities using evidence from four rural kebeles in Enebsie Sar Mider Woreda, Southwest Amhara, Northern Ethiopia. The results are based on data collected from a survey of 191 households selected by systematic random sampling technique, four Focus Group Discussion (FGD), and five Key Informant Interview (KIIs). Both binary logit and censored Tobit models are used to estimate determinants of participation and income of non-farm activities. From nineteen hypothetical explanatory variables included in the analysis ten variables from Logit and ten variables from Tobit models affected non-farm participation and non-farm income respectively with a 10% level of significance. The key findings that age of the household head, annual agricultural income, and amount of remittance received by the family were statistically significant variables to affect negatively both participation and income of non-farm activities. On the other hand the number of family size, food security status, frequency of extension contact, access to mass media, and access to technical training were statistically significant and affected both participation and income of non-farm activities positively. Cooperative membership, the distance of residence from a market center statistically, and negatively affected only participation of non-farm activities. Finally, the amount of irrigable land negatively and the amount of credit borrowed positively affected the income from non-farm activities. The survey also showed that the contribution of the non-farm economy to the overall income of households is about 9.7%, it is very lowcompared with its potential. Finally, based on the core findings the office of Agriculture, office of food security, and office of Technical vocational and enterprise development recommended to provide support and monitoring more focus for younger households, assigning technically skilled extension workers in rural kebeles, to access credit after preconditions approved, and to minimize workload and provide continuous capacity building through technical training for those PSNP clients. Keywords: rural household, farmer, non-farm, participation, income, livelihood, Ethiopia1 Chapter 1: INTRODUCTION