This paper presents the findings of research on the rural–urban interactions and linkages between the town of Himo and two rural settlements in the surrounding area. The authors describe how urban growth has affected the livelihoods of different groups: high, middle and low income; urban residents and rural dwellers. They also explore the impact of these transformations on intra-household relations, in particular between genders and between generations. The main issues addressed in the paper are: flows of people (migration and mobility); flows of goods (agricultural production and access to markets); income diversification in both rural and urban settlements; and institutional and policy aspects, with particular attention to decentralisation processes. A related briefing paper is available for free download on IIED’s rural-urban web page