Starting with a conceptual framework adapted from Herforth and Harris (2013), we analyzed the nexus between farm production diversification and household diet diversity using data collected in 2011 for evaluation of the welfare and economic impacts of Kenya’s Cash Transfer for Orphans and Vulnerable Children (CT-OVC). We used a sample of 1,353 households drawn from six districts of western Kenya to test the hypotheses that on-farm production diversification correlates with household diet diversification and some production activities have stronger association with diet diversification than others in the context of ultra-poor, labor constrained families living in rural Kenya. Approximately 67 % of the sample households received cash transfers through the CT-OVC programme. Production diversification was positively and significantly associated with household diet diversification, with livestock ownership more strongly correlated than crop production. Poultry production had the most compelling correlation, followed by pulses. In both cases, the association was most plausibly attributed to an income effect rather than production-for-own consumption. These findings suggest that supporting investments in diversified livelihood systems in general and in small livestock assets such as poultry, sheep and goats in particular are viable interventions for the improvement of household food security and nutrition for very poor, marginalized smallholders. Under semi-autarkic smallholder agriculture, a diversification strategy, which integrates crop and livestock production, not only adds value directly via increasing diet diversity and quality and indirectly via income effects but also serves as a risk management instrument, protecting against weather and market shocks, and contributing to biodiversity and sustainable land management.