Land degradation has become a most pressing issue in drylands. Although crop and livestock production have been the dominant sources of income, there is an increasing realisation that alternative livelihood options need to be explored to ensure both environmental and economic sustainability. This paper provides a systematic review of alternative livelihood strategies currently adopted for improving livelihood conditions of dryland dwellers in different parts of the world. Although drylands encompass a vast social and geographic terrain and represent a heterogeneous socio-economic environment, this paper has been able to document some general lessons applicable to rural drylands for diversifying livelihood opportunities and promoting rural development while minimising the pressure from intensive land-based activities. The paper concludes with a discussion on how international development policies can move forward in the fight against land degradation and in helping achieve poverty reduction through investments in sustainable land management and alternative livelihood strategies. Copyright © 2011 John Wiley & Sons, Ltd.