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This article describes various opportunities but also constraints to greater crop diversification, and the impact on local sustainability in the Khorezm province of Uzbekistan in the Aral Sea basin. At present, approximately 70% of the area in this study region is sown to irrigated cotton and winter wheat under the so-called state mandate. We present evidence of the benefits of moving away from this approach toward more diversified farming with an increasing area of alternative crops in the selected region. We report on a series of studies that included a) crop suitability screening based on secondary data, b) joint farmer experiments, and c) a mathematical simulation model with the overarching objective to assess potential benefits and constraints for crop diversification. The findings of this long-term, multiyear, and multidisciplinary approach show that greater crop diversity can increase water use efficiency, and secure farm income in dryland areas prone to water scarcity and soil salinity. In addition, the findings of the simulation model confirmed that crop diversification could secure income of downstream farmers during the climate-driven decline in water availability. Overall, the findings indicate that greater crop diversity and improved access to markets can lead to a sustainable development path in the region.