This study aims at identifying the factors affecting their diversification of livelihood as well as to examine the effect of livelihood diversification on their household welfare. Considering the tribal people living area, six villages were purposely selected from the Sadar Upazila of Dinajpur district and then a total of 100 samples were collected by using pre-testing survey questionnaire with help of random sampling technique. Descriptive statistic, logistic regression and Ordinary Least Squared (OLS) were used to analyze the collected data for achieving the ultimate objective of the study. The result revealed that household size, age, farming experience, education, and training received, credit access and numbers of dependents are the statistically significant influencers for adoption of the livelihood diversification. The study also showed that diversification, age, religious status, marital status, education has positive significant effect on the household welfare of tribal people whereas numbers of dependents and land ownership of the tribal people have significant (p≤0.01) negative effect on their household welfare. This study also suggests that policy makers and authorities should facilitate them with more educational facility, sanitation, training on self-development skills and self-employment for the betterment of their living standards.