The present study was undertaken in Kullu District of Himachal Pradesh (India) to examine the effects of mountain agricultural development processes on livelihood options and their implications on sustainability. The micro evidence indicates that, while the process of agricultural transformation does not affect the number of livelihood options adopted by the households, their quality in terms of households as per worker earnings improves significantly. The data also show that the transformation based on harnessing the local niche, in consistency with mountain specificities, tends to be more sustainable and have positive effects on the quality of life, equity, and the natural resource base.