The present paper brings together two strands of literature by analysing the interrelationship between on-farm and off-farm diversification econometrically. Estimation results from simultaneous bivariate probit models suggest that on-farm and off-farm diversification decisions are closely related. The degree of diversification is significantly lower for farms where the farm operator works off-the farm. On the other hand, the probability of entering into the off-farm labour market declines with the degree of diversification in farm production.