Agricultural diversification refers to the shift from the dominance of one crop to production of a number of crops on a farm or in a region, to meet the ever-increasing demand for food. It is crucial for enhancing food security and reducing climate risks, yet small-scale farmers in rain-fed regions face challenges in adopting diversified farming systems. The main objectives of the study were to assess the present status of crops, livestock, integrated crop-livestock diversification in vulnerable and non-vulnerable villages and identify key determinants influencing agricultural diversification. The baseline survey was conducted in 51 villages of Bhalwal block of Jammu district (2016-17) and identified 25 villages as climate-vulnerable villages. In these 25 vulnerable villages, project entitled “Climate Resilient Sustainable Agriculture in Rain-fed Farming Areas of Jammu Region” has been implemented since 2016-17 in the said block. Therefore, for the present study, 300 farmers were selected randomly from the 25 vulnerable villages that are covered under under the said project. For comparison, 100 farmers were selected randomly from the adjoining non-vulnerable villages which were not covered under the said project. The results revealed that non-vulnerable villages exhibited slightly higher crop diversity (0.67) than vulnerable villages (0.63), while livestock diversity was higher in vulnerable villages (0.40) compared to non-vulnerable villages (0.37). Integrated crop-livestock diversification was also greater in vulnerable villages (0.88) than in non-vulnerable villages (0.82), highlighting the prevalence of integrated farming systems. Key drivers of crop diversification in vulnerable villages included access to irrigation, adoption of drought-tolerant crops and participation in training programs, which played a significant role in diversification. Strengthening diversification drivers particularly irrigation, resilient crops and capacity-building programs can enhance agricultural resilience. Policies should promote integrated farming systems to mitigate climate risks and stabilize farm incomes.