We analyze the impact of land fragmentation on production diversification and its implications for food security of farm households in rural Albania. Albania represents a particularly interesting case for studying land fragmentation as the fragmentation is a direct outcome of land reforms. The results indicate that land fragmentation is an important driver of production diversification of farm households in Albania. We find that land fragmentation stimulates significantly more diversification for subsistence farm households than for market-oriented households. Our findings have two key policy implications: (i) the consolidation policies that relocate and enlarge plots would have a significant impact on reducing agricultural production diversification; and (ii) land fragmentation contributes to the food security improvement by increasing the variety of foodstuffs produced by subsistence farm households.