Livelihood diversification has gained significance as a resilience-enhancing strategy in rural economies confronting agrarian stagnation, climate variability, and structural transformations. Karnataka’s rural landscape embodies these challenges, displaying a shift from mono-agricultural livelihoods towards multi-sectoral income portfolios. This paper analytically examines the dynamics of livelihood diversification and its sustainability implications in rural Karnataka using a synthesis of secondary data, policy documents, and theoretical frameworks. Anchored in the Sustainable Livelihood Framework (SLF), the study identifies emerging patterns, structural determinants, and socio-environmental outcomes shaping livelihood choices. Findings reveal an increasing transition towards allied agricultural activities, non-farm employment, rural micro-enterprises and migration-based income strategies. Diversification is shown to enhance economic resilience, strengthen social capital, and contribute to environmental sustainability; however, it remains uneven across regions due to disparities in infrastructure, resource endowment, education, and institutional support. The paper concludes with policy recommendations to reinforce sustainable livelihoods in Karnataka through skill enhancement, climate-resilient agriculture, rural industrialisation, gender-focused interventions, and integrated development planning