Forests provide millions of people diversified goods and services for survival and commerce in the tropics. Among forest goods, the category called nontimber forest products (NTFP) has received increased policy and research attention in light of its perceived potential to meet sustainable rural development and tropical forest conservation. In Ethiopia many rural households depend upon NTFP for their subsistence and cash income. Despite the contribution of NTFP to the rural household economy, the common view among Ethiopian policy makers is that a rural livelihood is equal to farm income especially with crop production. This is partly due to lack of quantitative, in-depth studies that explore the contribution of NTFP to rural household livelihood in the country. The present study therefore aims at addressing the contribution of NTFP in rural household livelihood and factors affecting household decision to collect and produce them. To attain these objetives, a flow or income approach with a theoretical non-separable household model under utility maximization framework was used. Result shows that NTFPs have a pivotal role revamping the rural economy.