Soil acidity is a major constraint for food production in the Highlands of Ethiopia, the main cereal growing area. We conducted two field trials in nutrient-poor, acidic fields in the Highlands of Ethiopia to evaluate the effects of dolomitic lime at rates of 0, 6 and 12 t ha−1 on the utilization of commonly used phosphorus (P) and nitrogen (N) fertilizers. Blended fertilizer (at a liming rate of 12 t ha−1), containing potassium (K), sulfur (S), zinc (Zn) and boron (B) were also evaluated. The liming rate of 12 t ha−1 improved the utilization of P fertilizer most and only 20 kg P ha−1 was needed to reach 90% of the maximum wheat yield in soils with a high P sorption capacity. Liming and P fertilization, increased the N use efficiency from 0 to 30%, whereas the P use efficiency increased from 3 to 25%. Liming also increased the concentrations of calcium (Ca), magnesium (Mg), sulfur (S), molybdenum (Mo) and Zn and retained the concentration of copper (Cu) in wheat grain at a higher level than in unlimed treatments. This indicates that even high liming rates did not depress the utilization of nutrients from fertilizers, lime or soil. Regarding harmful heavy metals, liming reduced the nickel (Ni) concentration in wheat to about half of that in unlimed treatments. This study demonstrated how liming was a prerequisite for improving the quantity and quality of wheat growing in the acidic soils of the Ethiopian Highlands.