This study systematically reviews the literature on subjective well-being and capabilities among farming households to integrate the capability approach with subjective well-being research in agricultural development. A systematic narrative review was conducted on relevant theoretical, conceptual, and empirical studies published primarily between 2010 and 2025, with selected foundational works retained to support the theoretical framework. The synthesis indicates that farmers’ subjective well-being depends not only on income and material conditions but also on psychological well-being, social relationships, institutional support, environmental conditions, and the ability to pursue valued ways of living. Farmers’ capabilities are shaped by access to productive resources, farm-economic opportunities, social-institutional support, and cultural-spiritual values. However, the literature remains fragmented: studies of subjective well-being rarely adopt a comprehensive capability perspective, while capability-oriented studies less frequently examine subjective well-being as an explicit outcome in agricultural contexts. Based on the synthesis of 15 relevant articles, this study proposes a framework linking four capability domains—resource, farm-economic, social-institutional, and cultural-spiritual capabilities—to farmers’ subjective well-being through **agency-retention orientation**, defined as farmers’ capacity and willingness to sustain farming activities and retain productive agricultural land as part of their livelihood choices. Cultural-spiritual capability is further proposed as a potential reinforcing factor in the relationship between capabilities and agency-retention orientation through land attachment, agricultural identity, cultural values, and long-term livelihood commitments. The proposed framework contributes to the literature by integrating multidimensional capabilities, farmer agency, agricultural land retention, and subjective well-being, while providing a conceptual basis for future empirical testing, measurement development, and policies supporting sustainable agricultural livelihoods.