Small-scale farmers make up the majority of farmers worldwide yet experience particularly high rates of food insecurity. A growing body of literature explores pathways to food and nutrition security among small-scale farmers but has yet to reach consensus on the most effective pathways (e.g., crop specialization for market sale versus on-farm crop diversification for home consumption) to improve livelihoods. Using structural equation modelling (SEM) based on data drawn from the 2015/16 Uganda National Panel Survey, this study considers how farm and household characteristics including gender, age, education, farm size, region, and off-farm income relate to market engagement (farm sales, market purchases) and on-farm crop diversity (Simpson’s diversity). We then further examine how market engagement and on-farm crop diversity relate to household livelihood outcomes including dietary diversity and food security (number of food secure months). Findings suggest that both higher levels of market engagement and on-farm crop diversity are associated with increased dietary diversity. Higher levels of crop diversity—whether for market sale or for self-consumption—are strongly associated with improved food security. Market engagement is positively associated with increased dietary diversity, and this association is particularly strong for market purchases. Together, these findings highlight the potential for both market-based strategies and on-farm crop diversity to contribute to food security goals in Uganda, providing further evidence that these strategies can be complementary.