Although vegetables are becoming increasingly important both economically and nutritionally in Madagascar, there is still a notable lack of empirical research on their broader impacts. This study aims to fill that gap by investigating how vegetable production influences the welfare and nutritional status of smallholder farmers in Madagascar’s central highlands, particularly in the Vakinankaratra region. Drawing on cross-sectional data, the analysis finds a significant positive relationship between market-oriented vegetable farming and improvements in both household welfare and dietary diversity. These findings suggest that producing vegetables for the market not only serves as a valuable source of income but also contributes to more varied and potentially healthier diets for farming households. In contrast, the study does not find similar benefits for households engaged in less commercially driven or subsistence vegetable farming. Based on these insights, policy efforts should focus on promoting commercial vegetable production, enhancing farmers’ agricultural skills, and improving access to markets in order to boost both livelihoods and nutritional outcomes.