Livelihood strategies are at the center of development. In the context of rapid urbanization,rnunderstanding the urban livelihood strategies plays paramount role for the policy andrnpractice arena. Accordingly, this study was conducted to analyze urban livelihood strategiesrnof female-headed households. Purposive sampling was used to select 90 sample femalernheaded households. The Primary data were collected from purposively selected householdrnusing household survey, FDGs, KII and using six questions as a theme in the extendedrnlivelihood framework for analysis too. The collected data was analyzed using descriptivernstatistics to analyze the quantitative data. The finding of the survey result indicates that muchrnof the female-headed households (56.7%) in the town practice diversified livelihoodrnstrategies that combined on-farm activities with non-farm activities in the town. Thereforerndiverse livelihood options are available and thus, female - headed households pursue diversernrange of activities. The chi-square tests were used to explore livelihood asset functions in thernform of extended livelihood framework. The association between dummy and explanatoryrnvariable: diversification as means of survival dominated urban farm and nonfarm femaleheaded households pursue as livelihood strategy which was in turn determined by age ofrnhousehold, income of household, educational status, land access, credit access and ownrnhouse. Institutional support and human capital should be given priority to enhance thernlivelihood of the female headed households. The study suggested that prnPolicy-makers need to work to promote livelihood diversification in the form of specializationrnin order to enhance capital accumulation and to minimize vulnerability of the female urbanrnpoor.