As the number of de-stabilized regions of warfare or post-war conditions worldwide continues to grow, this article investigates how civilians survive in the context of a civil war. It analyses livelihood strategies of farmers in the war-torn areas of Sri Lanka, using an analytical framework based on a revised form of DFID’s sustainable rural livelihoods approach, placing particular attention on the institutional reproduction of household capital assets in the war economy. The author delineates a three pillar model of household livelihood strategies focusing on how households (1) cope with the increased level of risk and uncertainty; (2) adjust their economic and social household assets for economic survival; and (3) use their social and political assets as livelihood strategies. Empirical evidence comes from four case study villages in the east of Sri Lanka. Although the four case studies were very close together geographically, their livelihood outcomes differed considerably depending on the very specific local political geography. The role of social and political assets is essential: while social assets (extended family networks) were important to absorb migrants, political assets (alliances with power holders) were instrumental in enabling individuals, households or economic actors to stabilize or even expand their livelihood options and opportunities. The author concludes that civilians in conflict situations are not all victims (some may also be culprits in the political economy of warfare), and that war can be both a threat and an opportunity, often at the same time.