The relationship between farmland loss, nonfarm diversification and inequality has been well-documented in the literature. However, no study has quantified this relationship. Using a dataset from a 2010 field survey involving 477 households, this study has contributed to the literature by providing the first econometricevidence about the impacts of farmland loss (due to urbanization and industrialization) onnonfarm diversification and income quality among households in Hanoi's peri-urban areas. Our results show that under the impact of farmland loss, households have actually diversified their income through various nonfarm activities,notably in informal wage work. In addition, while farmland loss has reduced the share of farm income, resulting in an increase in income inequality,it has also increased the share of informal wage income, leading to a decrease in income inequality