An on-farm experiment was conducted in sub-tropical low hills zone of Himachal Pradesh to study the economics of diversification of existing Farming Systems under marginal household conditions for three consecutive years of 2013-14 to 2015-16. Benchmark surveys on 24 marginal house holds in the area were carried out for the purpose. Field crops + dairy and Field crops + dairy + goats were identified as the prevailing farming systems. Interventions were made to address the important constraints within each farming system. The study was carried out with before and after approach for studying the economics of diversification of existing farming systems. Before diversification benchmark income recorded in respect of Field crops + dairy and Field crops + dairy + goats was ` 22465/- & ` 20147/- respectively. Interventions in existing crop component including sowing recommended crop varieties, recommended fertilization, proper weed control & diversification with inclusion of oilseed & vegetable crops during rabi season increased the income of house holds. Similarly, interventions in livestock components viz., mineral mixture supplementation & ensuring round the year green fodder availability by growing sorghum during kharif & berseem + oats during rabi season increased net income of households. Capacity building module further resulted in increased technical know-how of participating households & proved helpful for better management of production techniques at the field. After three years diversification by way of implementation of such interventions in crop component, livestock component, product divesification & capacity buildings, average net income of Field crops + dairy and Field crops + dairy + goats farming systems increased to ` 41,748/- & 40,453/- respectively.