The purpose of this study was to assess livelihood diversification activities in the studyrnarea and to identify and describe the major types of assets that enable the diversificationrnof the rural livelihood activities, This study also aimed at identifying the majorrnconstraint,l' that affect the participation of individuals or householdl' in diverse activities,rnA total sample of 138 households were selected from three rural Kebele administration.'rnby using proportionate stratified sampling technique, and the necessary data wasrngenerated through household questionnaires, focus group discussion, key informantrninterview and direct observation. Both qualitative and quantitative methods were used tornanalyze the data,rnHousehold,I' are widely engaged in growing of various types of crops and rearing o(rnlivestock. Teff, maize, barley and wheat were the major types of crops in the study area,rnScarcity o((arm land. lack of agricultural inputs, unreliable rainfall, and declining ofsoilrnfertility were the major constraints jor crop production. Sheep and chickens claimed thernlargest proportion of livestock in the area, Animal rearing was constrained by shortagernof grazing land, lack of additional fodder and animal disease,rnA significant proportion of households participated in non-and offfarm activities, whichrnaccount for 58. 7 percent and 29 percent, re,ljJcctively. Handicrq/is, trade and grain millsrnwere the major sub-sector of non-farm activities, However, the sub-sector of non:fi:lrmrnactivities are constrained by lack of transport, lack of finance, intensive engagement inrnfarm work, lack of market and lack of education and training. Thus, the developmentrnendeavors should aim to reduce the above constraints,