In the context of hill agriculture, diversification has occurred both across and within crop, livestock and forestry sectors. Agriculture, in its broader sense is the mainstay of mountain people. Diversification in agriculture has become necessary for developing countries since growing of basic staples such as cereals alone cannot support economic development, notwithstanding the need to ensure food security to the people. Diversification with commercial crops is now a key strategy that can increase agricultural incomes and minimize risks due to crop failures and further help in poverty alleviation, employment planning and environmental conservation. The present study was undertaken to probe into changes in cropping pattern, region wise levels of diversification and determinants of diversification both at macro and micro level. Diversification in different districts of Himachal Pradesh was assessed by using Herfindahl index. Regression analysis was carried out by using Herfindahl index at macro level for the selected period from 1972-73 to 2011-12 and Entropy Index at micro level to find out the determinants of crop diversification. Diversification towards high value cash crops in most of the districts (ten) did take place, but its intensity was quite pronounced in Lahaul & Spiti, Kinnaur, Shimla and Kullu where the increase in area under the non-foodgrains varied from 17.18 per cent to 57.47 per cent over the study period. The ongoing process of crop diversification in the state has become evident from rising proportion of gross cropped area under fruit and vegetable crops as per present study.