Over the past 15 years income sources in the Amazonian community of Carvão have diversified to include government salaries, retirement and welfare benefits, and wages from an evolving informal service sector. These non-farm incomes are now more important to household incomes than the sale of agricultural products. Out of 80 households only three families were found to depend almost entirely on the sale of agricultural goods for cash income. Agriculture is still a part of most families’ livelihoods; however, production today (...) is mainly a subsistence activity. Recent changes in Carvão are consistent with trends of livelihood diversification observed in rural societies across the globe. However, current research reveals that Carvão is different from other case studies in a number of ways. A history of livelihoods illustrates that residents in Carvão have always engaged in a range of activities, including farming, extractive activities, and wage labor. New incomes are the result of new jobs in the public sector and social policies benefiting the rural poor. In contrast to the literature on livelihood diversification, the decentralization of the federal government in Brazil has resulted in greater opportunities for rural income and employment. Consistent with recorded trends, research shows that small farmers in Carvão have down-sized agricultural production. Farmers cite low market prices (the result of vertical integration of local markets) as one cause of this decline. Residents, especially small farmers, interested in diversifying agricultural production are limited by inadequate extension services and credit, and younger residents seek public sector employment. Income diversification has increased livelihoods security; however, future livelihoods will depend on new economic growth. Given the stagnating public sector and a weak industrial sector, production geared toward growing urban markets is a viable means for further income generation in Carvão. (shrink)