Rapidly changing hydrological conditions under climate change, upstream developments, and local water infrastructures require transformative changes in water management strategies for the agriculture sector in the Vietnamese Mekong Delta (VMD). For more than three decades, the agricultural policies in Vietnam have emphasized the intensification of rice production. In recent years, however, the Vietnamese government has started to pay more attention to longer-term sustainability considerations. Recent regional plans and high-level policies, including the Mekong Delta Plan and the Resolution 120 emphasize the development of high-value, sustainable and climate-resilient agriculture and food production. This shift has its challenges. One of them relates to changes in the government-mandated flood-control strategy. The increased awareness of the agricultural and environmental benefits of seasonal floods including soil fertility maintenance and pest management has resulted in new government regulations that require farmers to adopt a so-called 3–3–2 cropping cycle which means that every three years, farmers protected by high dikes should allow their rice fields to get flooded during the third rice season. Some of the farmers, however, have been reluctant to shift their farming cycle away from the triple-rice cropping system because of livelihood security-related concerns. Our study examines rice farmers’ livelihood sustainability in the upper delta by applying a sustainable livelihood framework to systematically identify prospects and challenges for more sustainable flood-based livelihoods. We interviewed 160 rice farmers and conducted two focus group discussions in two communes in An Giang province. Our results show that appreciation of the benefits of the 3–3–2 cycle has increased while the results of the livelihood capital index calculations show relatively good status of livelihood sustainability of farming households, indicated by the overall 5–capital scores of over 0.4. The study also identifies other constraints to sustainable farm-based livelihoods including unstable rice markets and shortage of labor. A key finding, however, is that unless more supportive policies and enhanced viability of flood-based crops are developed, farmers will not be sufficiently motivated to change their farming practices.