The study focuses on the connection between structural transformation and economic development in Arunachal Pradesh specifically in agricultural sector. The study examines the changes in sectoral output, employment distribution, agricultural productivity, household income, and non-farm employment using secondary data from government publications, state economic surveys, national statistical sources, and relevant literature. The results suggest the existence of partial and uneven structural change in Arunachal Pradesh. Though the agriculture sector has reduced in the gross state domestic product and the service sector has grown, a significant population of workers still relies on agriculture and allied activities. The gap between falling agricultural output and the continued high levels of agricultural employment has resulted in a structural imbalance with low labour productivity, disguised unemployment, low farm incomes and rural inequality. The growth of industries has been limited and doesn't generate enough productive jobs, which forces many to take jobs in informal and low productivity service activities. Slowdowns in agricultural modernization are also driven by traditional land tenure systems, shifting cultivation, poor market linkages, lack of credit facilities, environmental limitations, and gender inequalities. The study concludes that the two processes of structural transformation and agricultural development are complementary processes. It suggests for inclusive and balanced economic development climate-resilient agriculture, agro-processing, skill development, women empowerment, institutional reform and sustainable livelihood diversification.