<p>Ecosystem services are essential for supporting the livelihoods of rural communities because they are directly or indirectly linked to fundamental needs that improve human welfare and well-being. However, unplanned urban growth, especially in and around cities, damages these services, ultimately impacting people's livelihoods. In this context, the peri-urban area is most notably affected by uncontrolled and haphazard urban development. We aim to understand how urban expansion influences people in peri-urban areas by analyzing the connections between ecosystem services and livelihoods through household interviews and remote sensing techniques. We utilize a livelihood capital index to evaluate household strategies, categorized into three groups: agriculture (on-farm), non-agriculture (off-farm), and a combination of both. Results show that natural capital and ecosystem services significantly influence farm income, while human capital is vital for off-farm income. Financial capital, social capital, and ecosystem services are crucial for both on-farm and off-farm incomes. Furthermore, urban sprawl into city outskirts has caused environmental damage in peri-urban zones and led to livelihood losses among marginalized groups.</p>