Non-agricultural rural employment accounts for an increasing proportion of total rural employment in Latin America. Its potential for stimulating rural development has been noted, but it has also been analysed as a focal point of poverty. This article considers the magnitude and composition of this employment in some of the Central American countries and examines the conditions under which non-agricultural activities may help to improve rural employment and income. It is noted that non-agricultural rural employment is heterogeneous and different types of employment arise in response to different dynamics. Although there are potential sources of non-agricultural rural employment which have no connection with agriculture, in the countries analysed it is the characteristics of the agricultural sector which influence most heavily the composition and characteristics of such employment. Agriculture influences both the generation of non-agricultural productive employment and the creation of makeshift alternative jobs, primarily through demand for non-agricultural goods and services and the discharge of surplus labour. Consequently, in order for non-agricultural rural activities to make a significant contribution to rural development it is necessary to adopt an approach which integrates both the agricultural and non-agricultural elements of such development.