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Examination of livelihood assets is crucial for displaced people as it informs effective resource allocation and support. This study investigates the livelihood decisions of households displaced by Nepal's Tanahu Hydropower Project using multinomial logistic regression to evaluate how different assets affect their choices. Data were obtained using questionnaires, with a total of 185 questionnaires used for the analysis in this study. Descriptive and inferential statistics were used for data analysis. This study finds that physical assets substantially influence livelihood strategies, promoting diversification and nonfarming activities. Interestingly, social assets have a negative impact, whereas natural, financial, and human assets exert no significant effect. The study highlights the community's focus on economic stability, balancing immediate financial needs with long-term goals such as children's education. However, it reveals ongoing financial struggles, with an average daily income of only 1.962 USD and many households remaining in poverty, particularly those dependent on farming. The study also reflects on the mixed perceptions toward government policies, influenced by factors such as skill gaps and family aspirations. These findings provide essential insights for targeted support and resource allocation to displaced populations.