Handicrafts offer rural communities an important avenue for non-farm work and earnings, but the evidence on how far they generate rural jobs is dispersed across different crafts, places and academic fields. This systematic literature review asks what part handicrafts play in advancing rural employment, income and livelihoods, and it records the opportunities, obstacles and interventions discussed in the published record. Reporting followed the PRISMA 2020 guidelines. Information from these was entered into an evidence matrix and examined through descriptive statistics and thematic synthesis. The studies are heavily concentrated in India and are largely recent. Six themes were identified: employment, income and economic viability; poverty and how public programmes perform; collective, cluster and enterprise-based models; gender and women’s livelihoods; skills, knowledge transmission and digital capability; and resources, space and the environment. Handicraft and handloom work is reported as a significant source of rural jobs, yet earnings are frequently modest and public programmes deliver uneven employment results. Clusters, producer groups, enterprise models, upgraded skills and digital capability are linked to stronger outcomes, while intermediaries, restrictive gender norms, weakening knowledge transmission, dwindling resources and regional inequalities hold them back. Major gaps include few longitudinal or outcome-oriented studies, limited use of craft villages as units of analysis, little evidence on market demand, and slight research beyond India.