This report presents an analysis of the structural determinants of living standards and poverty in Mozambique, which is based on nationally-representative data from the first national household living standards survey since the end of the civil war: the Mozambique Inquérito Nacional aos Agregados Familiares Sobre As Condições de Vida (MIAF), or National Household Survey on Living Conditions. Poverty in Mozambique is predominantly a rural phenomenon and is pervasive, with over two-thirds of the population falling below the poverty line. The degree of regional variation of poverty within the country is striking. Poverty levels are highest in Sofala, Tete, and Inhambane Provinces, where over 80 percent of the population lives below the poverty line, and lowest in Maputo City (although, with a headcount of 48 percent, poverty is still high in the capital city). The poverty estimates indicate that even though Mozambique is recovering from the emergency situation of the civil war, and becoming more self-reliant for its basic needs, there remains a great deal of structural poverty in the country. Areas that stand out in particular are low levels of human capital, including low educational levels and the poor health of most of the population; low productivity in the agricultural sector, where most Mozambicans are employed; a weak physical infrastructure and poor access to basic services, including potable water, health facilities, transportation, communications, and markets; and high rates of fertility and corresponding high dependency ratios. The policy simulations that illustrate the impact that changes in the levels of determinants of poverty have on poverty levels allow us to identify six possible elements of a prospective poverty alleviation strategy for Mozambique. These include (1) increased investment in education, (2) sustained economic growth, (3) a sectoral pattern of growth favoring faster growth in the industrial and services sectors, (4) measures to raise agricultural productivity, (5) improved rural infrastructure, and (6) reducing fertility and dependency load within households. In conclusion, any meaningful poverty reduction strategy in Mozambique must give the highest priority to rural areas and must address these macro-level and household-level determinants of poverty in its policy formulations.