In a challenging contemporary context of isolation and inequality, inhabitants of small Pacific islands have employed a variety of strategies to ensure that their livelihoods are both secure and sustainable. On the outer island of Aniwa, subsistence activities still constitute the basis of island life but are complemented by an increasingly diverse mix of cash‐generating livelihood practices. Different motivations and constraints, including access to natural, physical, financial, social and human capital, affect the composition and success of household livelihood portfolios. Despite the significant inequality in household cash incomes on Aniwa, traditional sharing and exchange relationships between households on the island and between island and migrant households ensure sufficient food and shelter for all villagers. Rather than being a one‐way drain on the island's skills and income‐generation potential, the constant flows of people, money and goods between the home island and migration destinations sustain the outer‐island community and its diasporas. Aniwa thus exemplifies how diversification and migration can provide a basis for sustainable and resilient island livelihoods.