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Understanding household livelihood strategies is pivotal to minimize rural poverty in the least developed countries like Nepal. This study is an attempt to assess livelihood strategies pursued by rural households, investigate the most remunerative strategy, and identify the factors that influence a household’s choice of better strategies in rural Nepal. Primary data collected in 453 households from three villages of central Nepal are analyzed quantitatively within a sustainable livelihood framework. This study categorized households into five main livelihood strategy groups. The results showed that the majority (61%) of the households diversified their income to non-farm sources. Livelihood diversification to business/enterprise strategies adopted by 16% of the households is the most remunerative strategy followed by commercial farming that includes 13% of the sample and are more relevant to poverty reduction. Land holding, education, agriculture and skill training, access to credit, and proximity to the road and market center are the major influencing factors on the adoption of higher returning livelihood strategies. Stimulating poor households to follow market-oriented farm and non-farm activities by improving access to education, vocational training, rural credit, and rural infrastructures is momentous for reducing poverty in the rural areas of central Nepal.

Household Livelihood Strategies and Implication for Poverty Reduction in Rural Areas of Central Nepal