This study examined the influence of market diversification strategies on the performance of commercial banks in South Sudan, a country characterized by political instability, economic uncertainty, and infrastructural challenges. Anchored on the Innovation Diffusion Theory, the study adopted a descriptive research design and targeted all 30 licensed commercial banks in South Sudan. A census approach was used to select respondents from top, middle, and lower management levels, yielding a total of 90 participants. Data was collected using structured questionnaires and analyzed using descriptive statistics, correlation, and regression analysis with SPSS version 25. Descriptive results indicated that market diversification strategies such as geographic expansion, product diversification, and digital banking channels were implemented to varying degrees, with the highest mean score for geographic expansion into underserved regions. Correlation analysis revealed a positive and statistically significant relationship between market diversification and bank performance while regression analysis confirmed that a unit increase in diversification efforts significantly improved performance metrics such as return on assets, profitability growth, and customer base expansion. The study concludes that market diversification is a vital strategic driver for improving the resilience and competitiveness of commercial banks in fragile economies. It recommends that banks in South Sudan adopt a strategic approach to diversification by aligning new market entries and product innovations with customer needs, investing in digital infrastructure, and considering partnerships to mitigate operational risks.