This RIRDC study of farm diversification in the Northern Midlands of Tasmania draws out the complex of factors that influence decision making about change. This region has been affected by the downturn in the wool industry and severe drought (now broken) over the four years preceding the study. These factors along with the recent availability of water for irrigation as a consequence of the development of a major water scheme means that not only pressure for, but opportunity to diversify, has come about. This study explores 'how' and 'why' landholders diversify and the factors which influence their decision making. This report is targeted at farm families, regional communities, industry and government policy makers involved in diversification activities.