The effect of environmental degradation on the agricultural population is particularly significant in continental river basins in the arid regions. Therefore, it is necessary to evaluate the vulnerability of farmers' livelihoods to environmental degradation, and to identify both vulnerable populations and the causes of this vulnerability, in order to formulate measures to ameliorate these effects in agricultural populations. We conducted our study in the middle-lower reaches of the Shiyang River in China. Stratified random sampling surveys, participatory rural appraisals, and plot investigation were used to investigate and sample 366 households. We analyzed the farmers'exposure and sensitivity to environmental degradation and their adaptation ability, and assessed the vulnerability of their livelihoods to environmental degradation. We then used an econometric model to evaluate which factors have the greatest influence on the vulnerability of farmers' livelihoods to environmental degradation. Our results indicate the following: (1) Exposure level, sensitivity, and adaptation ability were highest among high-income and well-educated farmers; However, livelihood vulnerability was also highest for these farmers; (2) Farmer's exposure level, sensitivity, and livelihood vulnerability was lower, but adaptation ability was higher in farmers with single-livelihood strategies than those with multiple-livelihood strategies; and also in pure agricultural households than off-farming households; (3) The degree of environmental degradation was the most important influence on the vulnerability of a farmer's livelihood, but the farmer's affluence, education level, social capital, and livelihood strategy were key factors as well. We recommend reducing or remediating the effects of environmental degradation, increasing farmer affluence, education level, and social capital, and promoting diversified livelihoods to decrease livelihood vulnerability in agricultural populations. Finally, we indicate other concerning issues in research into livelihood vulnerability.