This paper uses panel data from the Living Standards Measurement Study ‐ Integrated Surveys on Agriculture (LSMS‐ISA) for Uganda to assess the farm‐level effects of non‐farm employment on agricultural intensification and productivity change. A sample selection model is used to account for both unobserved heterogeneity and potential simultaneity between agricultural production and non‐farm income. Results show that non‐farm employment can have differential impacts on farm technology intensity and productivity. Non‐farm income is found to have a positive impact on farm hired labor and improved seed intensity; a negative effect on on‐farm family labor use; and no significant impact on fertilizer, soil water management, and joint use of farm technologies. The econometric evidence also indicates that agricultural productivity declines as non‐farm income increases. Taken together, our findings reveal important tradeoffs between non‐farm employment and income and farm productivity growth under smallholder agriculture. The results indicated that targeted policies are required to reduce these potential tradeoffs between non‐farm employment and agricultural intensification and productivity change. This article is protected by copyright. All rights reserved