This paper analyzes the rural livelihoods of smallholder households in six villages in various parts of Malawi. Based on the analytical framework of “rural livelihoods approach”, the paper examines landholdings, labor use, maize production, and income portfolios of rural households. Various institutions such as customary land tenure and agrarian contracts are also analyzed with reference to their implications to agricultural production and household food security. Income from non-farm economic activities appears to be particularly important to smallholder households who were hit by the unfavorable weather condition in the 2004/05 agricultural season.