The report provides a coherent set of strategy measures and action programme for the diversification of activities in the rural areas of Armenia. The main findings of this report will complement the Government of Armenia’s (GoA) agriculture development strategy delineating the main lines of an action plan for the promotion of activity diversification in rural areas. It is expected that the reports will indicate priorities for the design of technical assistance projects dealing with the diversification of activities and rural development. The report is organised as follows. The first section provides background information on the RNFE in Armenia. The second section summarises recent agricultural sector and macroeconomic developments in Armenia as they relate to the RNFE. The third section describes the sampled communities socio-economic structure, agricultural sector and natural resource base. Section 4 outlines our regional/community level analysis of the pattern of non-farm rural employment and income generating activities (IGAs) diversification in a transition economy context. Section 5 of the report is based on our social survey and focus group activities which analyse the main determinants of participation in the non-farm economy. The findings from section 5 are then discussed and elaborated upon in Section 6 of the report where data are presented on the activities of “successful” rural non-farm diversifiers – non-farm enterprises – which is presented in the context of the rural economies of the surveyed marzes/ regions (Ararat, Gegharkounik and Syunik). Finally, the main findings of the report are placed in a national context and RNFE policy proposals and suggestions on strategic planning are advanced