The relationship between multifunctionality and the roles of rural communities has not been discussed fully although the connection between the two is an essential issue in the rural policy arena. Pursuing this issue, this paper considers that multifunctional hamlet activities are generated as institutional joint products within the hamlet. Also evaluated is the connection between multifunctional activities and institutional hamlet conditions under the Japanese direct payment program for less favored areas. Results of conceptual considerations and empirical evaluations reveal that specific multifunctional hamlet activities depend on hamlet conditions; those on the least favorable level tend to perform land preservation activities while those under the most favorable conditions tend to undertake recreational activity. Hamlets participating in forming landscape fall in the middle. Thus, firstly, institutional jointness is not constant but variable depending on hamlet conditions. Consequently, programs to enhance multifunctionality should respect hamlet conditions that represent different levels of institutional jointness of multifunctional activity rather than treat multifunctionality as a single concept. Secondly, for diversification, it would be effective to organize hamlet activities based on an open and wider human network rather than the traditional closed one in rural communities.