Agriculture is a basic source of income for rural households in Ethiopia. However, it is one of the major risky business activities influenced by different factors. Therefore, some rural households practice other opportunities as source of income in addition to farming. But the determinants of rural households’ level of income diversification and decision of choices of income diversification strategies were not well known for households. Thus, this study aims to identify determinants of rural household choice of income diversification in North Achefer Woreda. Quantitative and qualitative data were collected from primary and secondary data sources. A multistage sampling technique was employed to draw 348 sample households. Quantitative data collected from household survey were analyzed by using descriptive and econometric analysis. Qualitative data collected from FGD, KII and observation were analyzed by narrative. Multinomial logit employed to analyze the determinants of choices of income diversification strategies and Tobit model analyze determinants of households’ level of income diversification. This study identified four types of income diversification strategy of only farm, farm and off farm, farm and nonfarm, and farm, off farm and nonfarm that represented 45.69%, 17.24%, 19.25%, and 17.82% of total sample households, respectively. In general households’ source of income obtained from only farm, off farm, and nonfarm accounted 76%, 7% and 17%, respectively, to the overall households’ income of 18,298,201ETB. The multinomial logit model showed that age, land, livestock, extension, credit, and market distance negatively determined household’s choice of income diversification strategy. Sex, education, family size, dependency ratio, and information positively determined choice of income diversification strategy. Family size, information and risk were found to be positively related with families' level of income diversification by the Tobit model, while age, saving, credit, extension and market were found to be negatively related with level of income diversification. Generally, the choice and level of income diversification were determined by demographic, socio-economic, institutional and geographical characteristics of household head. Therefore, it is suggested that rural development strategy should focus on determinants of off farm and nonfarm activities to improve overall wellbeing of the rural societies in North Achefer woreda.