Multifunctionality of rural areas in Europe has become an important aspect of rural development in the last years. An important instrument to ameliorate the multifunctionality is diversification of farm income. As various forms of farm income diversification have been developed throughout Europe the paper will survey the effectiveness of undertaken measures. First the issue of farm diversification will be argued theoretically. Then case studies from Saarland, Germany and from Slovenia analyse the importance of diversification for rural areas. A comparison two regions will dissect the chances and risks of diversification in a comparable new and old EU member state.