This paper explores the impact of salinity on livelihood choices of rural households in south-western Bangladesh. We find interdependence among households' decisions involving various livelihood choices. High salinity reduces a household's probability of entrepreneurship while those households that stick only to agriculture suffer significant crop losses because of salinity. Households also face a trade-off between subsistence and entrepreneurial activities, that is, participation in one type of activity reduces the probability of participation in the other. Households with more agricultural land, in fact, benefit from high salinity levels by taking up fisheries related activities, whereas marginal households resort to increasing labour supply. Copyright © 2018 John Wiley & Sons, Ltd. Copyright © 2018 John Wiley & Sons, Ltd.