Identifying effective transformations to reduce poverty and approach rural sustainability is at the core of the first sustainable development goal of the United Nations. This article offers scientific support for continued efforts in sustaining rural development and livelihood resilience. Many studies have examined drivers of livelihood transition from farming to non-farm activities, especially participation in tourism against the backdrop of rural tourism development. However, few studies have identified ways to measure the level of tourism participation or have discussed how household-level capital influences decisions regarding tourism participation made by Tibetan ethnic households. This article assesses the role of livelihood capital in the adoption of tourism activities at the household level in Jiaju Tibetan Village, an ethnic region that is experiencing struggling agricultural business and developing tourism sector. Using household survey data, this study presents an ordinal logistic regression model to identify the determinants of the household tourism participation level. The results showed that households’ tourism participation was influenced by physical capital (e.g., proximity to major roads, odds ratio = 2.83 at p = 0.024; fixed capitals, odds ratio = 101.19 at p = 0.039), human capital (e.g., availability of family labor, odds ratio = 0.25 at p = 0.004; availability of skilled member, odds ratio = 2.91 at p = 0.002), and social capital (e.g., relatives in governmental sectors, odds ratio = 5.22 at p = 0.044; government payments, odds ratio = 8.78 at p = 0.04), while the influence of financial capital was not significant. The proximity to major roads, availability of skilled members, fixed assets, and direct and indirect support from the government to households were significantly and positively associated with tourism participation level. The effects of household labor availability and annual family income remain unclear. Overall, household livelihood capital plays a critical role in the enhancement of tourism participation in Jiaju Tibetan Village. Our findings have implications for understanding the shift of on-farm occupation to off-farm activities in tourism and for the pursuit of policies contributing to poverty reduction and rural revitalization in China as well as to the Sustainable Development Goals.