This study analyzed the factors affecting smallholder farmers decisions to adopt livelihood strategy choices and its impact on rural households’ livelihood outcomes in the Meta district, Eastern Ethiopia during the 2016/17 production year. The data used for the study were obtained from 180 randomly selected sample households. Multinomial logit model was employed to analyze the determinants of farmers’ decisions to adopt livelihood strategies. The average effect of adoption on households’ farm incomes was estimated by using propensity score matching method. The result of the multinomial logistic regression showed that age of the household head, distance from irrigation sources, social status, soil fertility status, education level, distance from Developmental Agents (DAs) office, economical active members, soil fertility status, soil conservation and transportation services were significantly affects households’ adoption decision. Impact evaluation results showed that about 12.9, 45.2 and 41.9 percents of the sample households who using crop farming only, crop + livestock farming, and crop + livestock + off/non-farming strategies were non poor, respectively. Similarly, about 9.4, 30 and 19.4 percents of the sample households who using crop farming only, crop + livestock farming and crop + livestock + off/non-farming strategies were food secured, in that order. The estimation results provides a supportive evidence of statistically significant effect of livelihood strategies on rural households livelihood outcomes measured by food security status and poverty status. Therefore, policy makers should give due emphasis to the aforementioned variables to reduce households level food insecurity status and improve the livelihood of rural households.