Most refugee hosting communities are characterized by high levels of poverty with precarious livelihood conditions, low access to public services, and underdeveloped infrastructure. While the unexpected inflow of refugees might bring both constraints and opportunities for improving and maintaining local livelihoods in these communities, the understanding of these effects remains limited. Using a household level micro data set from a 2018 baseline survey of the Ethiopia Development Response to Displacement Impacts Project, this paper assesses the impact of refugee inflow on the livelihood strategies of host communities with respect to diversification and agricultural commercialization.