To shed light on the sustainable development of rural areas, we study the determinants of transitions from subsistence farming into either formal agricultural employment or agricultural entrepreneurship based on a recent nationally representative survey dataset. We pay particular attention to the roles of different capital endowments broadly including human, financial, natural, social and political capital. Our results show that human, natural, social and political capital are all important determinants of rural households’ transitions to on-farm employment and entrepreneurship while financial capital plays a limited role. These findings are robust to fully controlling for off-farm transitions as part of the household occupational strategy.