: This paper makes an attempt to understand the changing pattern of rural livelihood in the state of Orissa in India. The study reveals that the nature of diversification of household incomes is a consequence of both diversification of activities among different members of the household, and multiple activities of a single member. Further, agricultural labor as a livelihood option of rural workforce is losing its importance at a faster rate than any other option, and the rate is faster in case of female workers compared to the male workers. The greater association of female workforce and the linkage of farm and non-farm activities, level of development and accessibility are intertwined in propagation of the non-farm economic activities in the state. It is the manufacturing activity in the non-farm sector that has absorbed the maximum number of rural female workers, which is also slowly decreasing over the years. The additional jobs created in the non-farm sector have attracted the female labor force more towards the non-farm sector; however the participation rate of female labor force is very sluggish and confined only to the construction and manufacturing sectors. In terms of livelihood constraints in the rural economy of Orissa, finance is one of the most powerful constraints faced by the rural households in accessing the livelihood options in general, but it is more powerful with respect to accessing the non-farm activities.