Rural areas in the Western Balkans are experiencing two profound changes i.e. increased diversification of the rural economy and new governance models and arrangements. The paper aims at providing some insights into linkages and interdependences between rural livelihoods, diversification, and rural governance in Bosnia, Montenegro, and Serbia (BMS). In particular three different conceptual frameworks were used to analyze governance-rural development, governance-rural livelihoods and governance-rural economy diversification linkages. Input data to substantiate the conceptual frameworks in the rural contexts of BMS were the results of surveys dealing with rural governance and rural livelihoods diversification performed in the period 2011-2013. There is a linkage between agricultural and rural development governance and coordination, and exploitation of the full potential for rural livelihoods and economies diversification. Governance is relevant for rural livelihood diversification and rural development both as process and structure. Governance - comprising institutions, policies, and processes - affects access to and use of livelihood assets with impacts on diversification. Diversification is also affected by a set of sectoral policies that go beyond agriculture. Government policies can act as a stimulus to the diversification of economic activities of rural households. Governance - as actors and institutions - also affects diversification. Governance arrangements determine the range of actors involved in policy design. Depending on actors involved and their interests the policy character and architecture are defined. Meanwhile, also diversification has impacts in terms of governance in rural areas. In fact, changes that happen in rural areas, thanks to diversification, influence also rural governance and policy. Many new rural actors are consulted about rural development which was not the case in the past. Diversification affects the typology of actors that are involved in policy design which has implications in terms of priority policy measures definition. These insights should be taken into consideration to redesign rural development policy.