Livelihood diversification is a key strategy for rural farmers to improve income, build resilience, and reduce vulnerability to agricultural shocks. However, the status, drivers, and constraints of diversification vary across different contexts, requiring localized assessments to inform interventions. This study aimed to assessing rural farmer’s livelihood diversification practices, identify the types, status/extent, drivers, and explore the constraints that hinder rural livelihood diversification in Enebsie Sarmider Woreda, East Gojjam Zone, Amhara Region. A mixed-methods approach was employed. Data were collected through structured surveys, key informant interviews, and observations. Multistage sampling was employed to select 307 respondents from four kebeles. Quantitative data were analyzed using SPSS version 27.0 and reported through descriptive statistics like percentage, frequency and mean, while qualitative data were analyzed through thematic analysis. Findings were presented using text, tables, figures and pie charts. Results of this study show that, 61.6% of respondents relied solely on farming, while 38.4% engaged in diversified livelihood strategies. Major drivers of livelihood diversification include shortage of land, inadequate income from cropping, agricultural shocks, lack of labor for farm activities and opportunities for capital accumulation. while constraints include lack of access to infrastructure, lack of raw materials, lack of startup capital, lack of awareness and technical skills, negative attitude of the local community towards non-farm activities, job marginalization as well as socio-cultural norms and gender disparities. The study revealed low levels of livelihood diversification among rural households in Enebsie Sarmider Woreda. Addressing key constraints and leveraging drivers can enhance rural livelihood diversification, reduce poverty, and improve food security. Comprehensive interventions, including infrastructure development, financial support, technical training, and community awareness, are recommended to promote diversified livelihood practices.