<p>This study explores the sustainability of livelihood strategies of local households in Bach Thuan commune, Thai Binh province, Vietnam, amidst rapid socioeconomic and environmental transformations. Utilizing a combined framework of the Sustainable Livelihoods Framework and poverty trap theory, the research evaluates five core livelihood capitals based on the primary data from 140 stratified households and key informants. The findings reveal a moderate overall Sustainable Livelihood Index of 0.489, with human and natural capitals demonstrating relative strength, while financial and social capitals remain critically underdeveloped. This interplay of strengths and constraints indicates that, despite the commune’s abundant ecological resources and skilled labor force, long-term resilience is hindered by structural barriers such as limited vocational training, insufficient access to credit, and weak social networks. The study identifies key factors contributing to persistent poverty traps, including fragmented governance, inadequate infrastructure, and absence of institutional support for innovation and market integration. In response, the study advocates for targeted policy interventions, focusing on skill development, inclusive financial services, digital infrastructure, and value-added agricultural and ecotourism models. It further emphasizes the need for participatory governance and integrated planning to optimize local assets and align them with external support systems. By integrating the SLF with poverty trap theory, this research offers both theoretical and practical contributions, providing critical insights into the challenges and opportunities for advancing rural sustainable development in Vietnam.</p>