Agroforestry is a climate-smart production system that sustainably diversifies environmental and socio-economic benefits to subsistence farmers, and is therefore considered more resilient than other agricultural systems. This study was conducted to assess the potential of agroforestry (AF) in mitigating smallholder farmers against climate variability and mitigating CO2 emissions through carbon sequestration in Machakel District, East Gojjam Zone, and Amhara Region, Ethiopia. Research methodologies used included literature review, questionnaire, and ecological survey. A sample of 45 plots with a plot size of 0.125 ha (10 m ×125 m) for a home garden, woodlot and parkland systems and 99 households engaged in AF and non-AF were selected randomly from three villages for ecological study which involved an inventory of on-farm trees and questionnaire survey for collecting socio-economic data respectively. SPSS (Statistical Package for Social Science) computer program software was used to analyze socio-economic data and allometric equations were used for estimating aboveground biomass and carbon stock. The diversity of benefits in AF practices such as arable crops contributed 35.23 % for AF household incomes, vegetable product 5.03 %, tree byproducts contributed 30.72% while livestock products contributed 29.92% for AF household income increased farmer`s resilience during environmental extremes and climate variability. AF practitioners were richer than non-practitioners with an extra income of Ethiopian Birr 41311 (US$ 1290) annually. Furthermore, agroforestry systems (AFs) such as parklands, home gardens, and woodlots stored substantial aboveground carbon stock (18.85 to 384.58 Mg C ha-1 with an average of 201.71 Mg C ha-1), and the difference in carbon stock among AFs was statistically significant at p < 0.001. Integration of crops and diversity in AFs were among the resilient features which reduced farmer’s risk from total crop failure. Further increased income as a result of the diversity of products from the AFs enhanced the resilience of AF practitioners. Therefore, vigorous efforts are needed to provide knowledge on the AF products value-addition innovation, promoting rich carbon land use, understanding, and addressing competing claims on natural resources. Key words: agroforestry, resilience, income, carbon