This paper analyses the determinants of participation in nonfarm activities and the impact of nonfarm employment on household income. A clear empirical regularity is that women are significantly less likely than men to be in wage employment and more likely than men to be in self-employment activities. We find also that households whose heads have completed secondary education or higher gravitate more toward wage employment. Nonfarm employment appears to be crucial for the alleviation from rural poverty in Ghana. With limited opportunities in agriculture, nonfarm employment is necessary to augment or supplement farm incomes. Copyright © 2011 John Wiley & Sons, Ltd.