The Dugda district's, Ethiopia farmers have employed the agroforestry system for millennia. However, farmers usually ignore the agroforestry system in favor of an intensive farming that grows a monocrop because they are unaware of its conservation and climate change mitigation benefits. This study's goal was to assess the impact of agroforestry on the plant diversity, carbon stock and to identify factors governing its adoption. From a total of 242 sampling points, tree species identification, height and diameter at breast height measurements were all done simultaneously. Complete measurements were taken in the home garden, 50 m x 100 m, 10 m x 10 m, and 10 m x 5 m quadrat were used for farmland, woodlot and grazing land, and line planting, respectively. From 0 to 30 cm depths, at each corner and in the middle, composite soil samples were collected from 50 sites (25 in agroforestry adopters and 25 in non-adopter). The outcome demonstrates that adopter sites store more carbon in their biomass and soil than the non-adopter sites. The one-way ANOVA and Fisher's LSD test findings revealed a significant difference in the mean biomass between adopters' and non-adopters sites. The highest plant diversity was recorded at the adopter site (H'), 2.25, while the maximum diversity (H'), at the non-adopter site was 1.95. Age, education, and family size are factors influencing farmers’ decision to adopt agroforestry practices. The results of the study showed how agroforestry reduces climate change and protects biodiversity. Therefore, encouraging non-adopters to engage in agroforestry practices is essential.