This study was conducted in three randomly selected districts viz. Vehari, Faisalabad, and Narowal of the Punjab province to examine the determinants of livelihood diversification. Using multistage sampling 480 respondents were interviewed face to face using a structured questionnaire and were analyzed by SPSS (version 21). The major findings reveal that most of the smallholders, i.e., 126 (26.3%), relied on cropping and off-farm livelihood diversification strategies to sustain their household income. The structural determinant factors were identified as “push factors” while household/domestic determinant factors were identified as “pull factors” of livelihood diversification. Moreover, the results of the multiple linear regression model unveiled that household’s choice and adoption of livelihood diversification strategies were positively affected by age, level of education, livestock holding status, access to credit, extension contacts, and income while gender, landholding size, access to irrigation, access to mass media, and crop risk were negatively affected. The study concludes that both structural and household determinants of livelihood diversification contribute positively to improving the smallholders' household well-being and keeping them away from vulnerabilities. The study findings have implications for policymakers and development practitioners who are working to improve the livelihoods of smallholders in the Punjab province, Pakistan.