Coffee is one of the world’s most important crops given the highest number of people living directly or indirectly from it. Farmers have an excellent local knowledge about different tree species which are either retained or planted on their farms. The main purpose of this study was to investigate coffee growers’ local knowledge on the roles of shade trees in coffee production systems at Yayo District in Ilubabor Zone Southwest part of Ethiopia. A total of 120 (20 key informants and 100 households) participated in interview. Data were collected by using semi structured interview and field observation. The data were analyzed by preference ranking, direct matrix and using descriptive statistics. A total of 20 most commonly used coffee shade tree species belonging to 16 genera and 7 families were identified in the study area. Fabaceae was the most species rich plant family followed by Euphorbiaceae and Moraceae .The coffee farmers in the study area are mentioned benefits of the shade trees such as for improvement of soil fertility and moisture, to protect from unsuitable environmental stress, for longer life span of coffee plants, reducing erosion, increase coffee yields and quality, and reduce weed and grasses. Among shade tree species best compatible with coffee plant such as Albizia gummifera, Acacia abyssinica, Albizia schimmperia, Millitia ferruginea, Albizia grandibracteata ,Cordian africana and least were Corton macrostachyus were highly favored in that order. However, farmers considered as preferred coffee shade trees species by characteristics were mainly based on tree height, fast decomposition rate, small deciduous compound leaves, and umbrella crown shape and root depth. Coffee farmers of the study area managed their owned shade tree species through pruning, mulching and composting, thinning, weeding and hoeing and debarking and intercropping operations. To agreement endorsement of the extension of coffee shade agroforestry knowledge, the rural households must participate in pieces of training to improve their productivity and maximize the benefits of coffee shade in coffee production system.