It is widely recognized that if poverty reduction strategies are of any value to lessen the poverty of rural households, they should consider diversity of livelihoods of the poor and their determining factors. However, identification of factors that determine the abilities and willingness of rural household''s choice of livelihood strategies in Ethiopia have received little attention. This study aimed at generating location-specific information on household poverty and their livelihood strategies in Ziway Dugda District of Oromia Region, Ethiopia.The study made use of data collected in a household survey. Data was analyzed using poverty index, descriptive statistics and econometric tools.The findings suggest that household livelihood strategies are diverse and households'' choices of them are differently affected by various factors. The main policy implication of the study is that policy-makers and development practitioners need to consider this diversity in livelihood strategies and factors affecting their choices by the households.