Today, nonfarm activities become an essential part of the livelihood strategies of rural households, especially in developing countries. The reason why rural households move to the non-farm sector is crucial for planning integrated rural development. In rural areas of Iran, due to factors such as drought and water scarcity, many households have moved to non-farm sectors or migrated to urban areas. The present paper aims at investigating the structure of rural employment and determinants of participation in non-farm activities in Neyshabur rural areas, Iran. We collected data by 380 completed questionnaires from rural households between September 2017 to February 2018 and the two-level multinomial logit model was adopted to investigate the determinants of employment. The structure of rural household's employment shows that 40.5% of the households are employed in farm activities only, 32.6% participated in non-farm activities only, and 26.8% in both sectors. The results of the twolevel multinomial logit model show that 24% of the total variance of employment is attributed to geographical factors and household residential places. Also, the number of employed people in the household and distance from urban centers have positive and significant effects on the probability of participation in non-farm activities compared to the farm activities. Policy suggestion for this study is the strengthening and expanding existing industrial parks. Besides, due to higher education and the lower age of the non-farm workers, vocational training to the rural youth for starting innovative businesses can also be an effective policy.