This study examined the impact of livelihood diversification on the economic performance of rural households in Nasarawa state, Nigeria. Multistage sampling procedure was used to select 390 respondents. Endogenous switching regression model was employed to carry out the impact analysis of diversified agricultural and non-agricultural activities on rural households’ economic performance of which income, poverty gap, and severity were indicators. The empirical findings revealed that rural household’s age, gender, level of education, access to market, membership of cooperatives, access to public transport and rural-urban seasonal migration significantly influenced income, while gender, level of education, household size, access to farmland, access to market, membership of cooperative and entrepreneurial skills significantly influenced rural households’ poverty gap and severity. Improved income of rural households in the study area promotes agricultural activities which is the mainstay of their economy. In conclusion, livelihood diversification improves living standard and reduces poverty for rural families and their communities.