Tikaram GautamAdhikari, Amit2026-06-152026-06-152025https://hdl.handle.net/20.500.14540/27024This study explores the relationship between livelihood diversification and poverty reduction in Panchkhal Municipality, Kavre, with a focus on how households adapt to changing socio-economic conditions by engaging in multiple livelihood strategies. Livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living. Livelihood diversification, the process of engaging in varied income-generating activities, has increasingly become survival strategy for rural and semi-urban households in Nepal. As traditional subsistence farming proves inadequate to meet growing needs, diversification into non-farm, off-farm, and service-oriented occupations is becoming more prominent. This study explores the key livelihood diversification strategies employed by households, and captures how these shifts are associated with poverty reduction. A mixed-methods approach was used, combining quantitative surveys of 101 households and qualitative interviews with nine respondents consisting of local residents, cooperative members, and key informants. The research employed purposive sampling to ensure inclusion of households with varied economic backgrounds and experiences in diversification. Data were analyzed through descriptive statistics, thematically, and field-based interpretation. This explored how households diversify their income sources through agriculture, business, employment, and remittances. Findings highlight the crucial role of diversified livelihoods in enhancing economic stability, improving living standards, and providing better access to education and healthcare. Findings show that households in Panchkhal have increasingly moved beyond traditional farming to embrace activities such as vegetable farming, animal husbandry, small-scale trade, foreign employment, and engagement in cooperatives and small businesses. Access to credit, local market integration, and skill development programs were found to be enabling factors. However, challenges such as lack of capital, inadequate skills, small market size, and limited access to technology continue to hinder broader diversification. By using both descriptive statistics and inferential statistics such as Chi-square test and ANOVA, the study concludes that livelihood diversification has played a significant role in reducing household poverty by increasing income stability, improving access to education and health services, and enhancing food security. Nevertheless, its success depends on structural support, access to resources, and institutional linkages. Despite significant challenges such as lack of capital, skills, and access to financial services, the community demonstrates resilience and adaptability. Family and community support, including financial assistance and knowledge sharing, significantly contribute to these efforts. The study underscores the importance of social capital, consistent with Bourdieu's theory, in facilitating livelihood diversification. Respondents' future plans indicate a proactive approach to ensuring long-term economic stability through business expansion, agricultural mechanization, and investment in income-generating activities. The research concludes that addressing the challenges through improved access to finance, training, and infrastructure is essential for supporting households in their diversification efforts. This research contributes to understanding how localized strategies can foster economic resilience, and highlights the need for targeted interventions in training, financial access, and market development to further enhance the livelihood prospects of semi-urban communities in Nepal. Key Words: livelihood diversification, livelihood strategies, social capital, povertyen-USSocio-economiclivelihoodsThesis