The objectives of this study are to look at the current and potential roles of extension in supporting the livelihoods of the poor in Nicaragua. Options are reviewed, cognisant of policy frameworks and their impact on the social, political, and economic context in which extension operates. This study relates the policy environment to the micro-level dynamics of change in public sector extension agencies and other institutional actors in order to provide an understanding, not only of policies and programmes that have been put in place to address these issues, but also of how resulting incentive structures have influenced field-level institutions in their changing relationships with the rural poor.