The question of whether and to what extent off-farm employment can contribute to developing marginal farm households in Pakistan is studied. Marginal farms include those of up to 2 ha in the irrigated areas of Pakistan Punjab, and owner-cum-tenant farms of less than 3 ha, as well as tenant farms of less than 4 ha. Data were gathered from 2 villages in Faisalabad District, and surveys were conducted from December 1978-April 1979, encompassing all 1074 village households. Further information sources were: a survey of 8 selected marginal farm households employed on and off the farm; village questionnaires; interviews; and observation. The macro, sectoral and regional analysis of underdevelopment and development possibilities for marginal farms in Pakistan looks at poverty, unemployment and underemployment and inequality in Punjab Province and Faisalabad District. Consideration of development opportunities within agriculture in Faisalabad focuses on the historical development of farm income opportunities, land management and self help initiatives for extra on-farm employment. Development possibilities outside agriculture are assessed with regard to the evolution of off-farm income generating activities and self help options outside the household. Turning to the underdevelopment and development activities of marginal farm households in the survey villages, discussion deals with the characteristics of underdevelopment, agricultural development and employment as well as non-agricultural employment, and self help initiatives for on-farm and off-farm employment. The effects of non-agricultural occupations on the poverty, employment and socioeconomic status of marginal farm households is assessed, as are the implications for development in Pakistan. A development policy oriented towards the rural poor as a target group should include the creation of non-agricultural employment opportunities.