Abstract : Past studies argued that crude-oil exploration in Nigeria has led to environmental problems in the crude oil-producing communities destroying livelihood activities in agriculture and agricultural related enterprise. Crude-oil exploration destroys the necessary nutrients that will make crops grown on land and grasses livestock eat. These have led to poor agricultural outputs and income making livelihood in agriculture unattractive. For survival and sustenance, people in this area tend to rely on multiple choices of non- farm rural activities. Hence, livelihood-diversification strategies of farming- households in crude oil-producing communities in Ondo State, Nigeria were examined. Techniques of data collection involved stratification of the area of study into high crude oil-polluted and less/non-oil-polluted areas respectively. Simple-random sampling was used to select respondents from these identified areas. Data were collected on respondent’s demographics in high oil-polluted and less/non-oil-polluted areas. Data were subjected to descriptive statistical, budgetary, regression and inferential procedures. High oil-polluted areas recorded more inequality in income distributions than less/non-oil-polluted areas. High oil-polluted areas indicated a rise from the share of non- farm income sources from 14.3% in the least quartile to 31.8% in the highest income-quartile. Percentage contribution of diversification income to net- income is higher in high oil- polluted areas than less/non-oil-polluted areas by 22.35%. Hence, livelihood diversification income is positively correlated to Net income. These diversified non-farm activities indicated a higher value and larger income elasticity especially in the high oil-polluted areas. Promoting the development of diversification strategies to these non-farm activities can generate meaningful employment opportunities and increase household- income.