Livelihood earning in desert areas has always been a challenge worldwide due to droughts and natural hazards. This study aims to analyze livelihood diversification strategies (income, wealth, and livelihood diversifications) and the impact of human, natural, physical, financial, and social capital on the well-being of the people of the Cholistan Desert located in Punjab, Pakistan. Following multistage random sampling, primary data are collected from 900 households in multiple villages of the Cholistan Desert, which are analyzed using descriptive statistics and the two-stage least squares (2SLS) method. Livestock (33.73%), its byproducts (34.82%), remittances (8.52%), agriculture farming (12.65%) and others like jobs, tenancy status and off-farm earning (10.28%) are witnessed as main livelihood strategies. Landholding, education, access to credit, and access to road (market center, transport pick up point, etc.), possession of large herds are major triggering factors for income and wealth via constructing a portfolio of diversified livelihood strategies by residents of the area. Aggravating education level, enhancing credit availability, and infrastructure improvement are momentous for keeping the pendulum of livelihood strategies swinging in momentum and stimulating households to adopt different livelihood activities in the Cholistan Desert of Pakistan.