The aim of this study was to examine the relation between markets, market access and livelihoodrndiversification in rural areas in three se lected kebeles of Kewet Woreda in North Shewa. The studyrnfindings were drawn from data generated through a blend of qualitative and quantitative me thods. Logitrnregression model was used to identify the determinants of market access in rural areas for both rura l andrntown markets. To determine market access, frequency of visi ting market places was used as a proxyrnmeasure. One way of ANOV A is also used to see whether there is sign ificant difference on non farmrnincome between market accessible and inaccessible households.rnThe findings show that rural fall11 households do not have access to forma l market information about croprnand livestock products; they rather depend on actual market day information from traders. The find ingsrnfurther show that households face different types of constraints to access markets depending on theirrnlocations, distance, availability of infrastructures and types of crop production. Mainly physical accessesrn,.rnto markets i.e. distance and lacks of roads were found to be the main constraints of rural households tornaccess market centers.rnIn addition, the fi nding of logit regression suggests that market access is negatively and significantlyrnaffected by distance. An increase in market distance by 30 minutes is expected to decrease rural marketrnaccess by 73%. On thc other hand , information access, family size, educational status of household headrnand farm size v.. rere found to be positively related to market access .rnI also found that availabil ity of market centers and market access determines the livelihood diversificationrnof rural farm households. Moreover, it is not only the avai lability of markets but also the size of thernmarket that determines the level of livelihood diversification in rural areas. Fall11 households who arernliving around large 11Iral111arket centers are able to diversify their sources of incomes than householdsrnwho live around small rural market centers.rnSimilarl y, the numbers of non-farm economic activities in which ru ral households participate depend onrnaccess to markets ancl the size of the markets itself. Households in remote areas who lack markets or facernserious difficulties in acces sing their nearest markets were found to beÂ· the least diversifier both in termsrnof the proportion of income from non-farm sources and numbcr of li velihood activities in which theyrnwere engaged. The result of one way ANOVA ana lysis reported that there is a significant relationrnbetween ma,ket access alld engagement in non-fann economic activi ties.