[Objective] The relationship between farming and herding households' livelihood capital and livelihood strategies was studied, and the spatial differences of farming and herding households' livelihood capital and the transformation between livelihood strategies were analyzed in order to provide a theoretical basis for reducing farming and herding households' livelihood vulnerability and ultimately achieving sustainable development. [Methods] Starting from the theoretical framework of sustainable livelihood analysis, a household questionnaire survey was used to analyze the key factors of livelihood capital and livelihood strategy transformation for farming and herding households in the national sandy land enclosed reserves in Maqu, Minqin, Shandan County, and Liangzhou District in Gansu Province, which were approved to be established in 2017, by combining a Logistic regression model and one-way analysis of variance (ANOVA). [Results] Financial capital was the most abundant form of livelihood capital, while natural capital was the least abundant form of livelihood capital for the farmers and herdsmen in the enclosed reserves of desertified land. There were significant differences in the distribution of livelihood capital among farmers and herdsmen with different livelihood strategies, and the livelihood capital of non-agricultural farmers and herdsmen was better than that of purely farming households. Cultivated (or grassland) area, cultivated (or grassland) quality, and production tools had significant positive effects on the choice of purely farming households. The size of the family labor force, the education level and the total household income had a significant negative impact on the choice of purely farming livelihood strategy. [Conclusion] The following countermesures should be promoted in the future. Those are increasing the publicity of ecological environmental protection in enclosed protected areas, strengthening the awareness of ecological protection among farmers and herdsmen, accelerating the development of agricultural mechanization, and encouraging the transformation of the remaining labor force to non-agricultural industries, thereby achieving diversification of livelihoods.