In Ethiopia agriculture is the backbone of national economy and source of livelihood for most of the population. Despite its importance, the agricultural sector in Ethiopia is characterized by low productivity due to soil nutrient depletion and low external agricultural inputs. The main objective of this study was identifying the key determinants farmers’ decision to adopt soil fertility management technology and its effect the adopted technologies on rural households’ farm income in case of Dega Damot district. The study was relying on cross-sectional data from 222 randomly selected households from different agrocologies and key informant interviews. The data were analyzed using Heckman two-stage models and simple descriptive statistics using STATA software. The first stage of probit regression results of the study show that the adoption decision of soil fertility enhancing technology was driven by households’ age, farm size, size of family, number of the labor force, position of land’ education, access to credit, livestock, farm experience and awareness at a statistical significances. The study finding confirmed that both partial and complete SFM adoption lead to significant increases in farm income and net crop value. In moister kebele, complementing improved varieties with inorganic fertilizer seems most important, while in drier kebele enhancing it with organic fertilizer appears crucial. SFM is related to higher labor force, but also significantly increases farm income. These findings imply that SFM can contribute to improve farmers’ livelihoods by breaking the nexus between low productivity, environmental degradation and poverty. The second stage result show that soil fertility enhancing technology adoption increases households farm income per timad. This implies that farmers should be encouraged to adopt soil fertility enhancing technology. Therefore, the study suggested that, the policies makers should be expanded the accessibility of credit service, dissemination of productive agricultural technology information, and creating opportunity of education for farm house hold has potential to increase soil fertility enhancing technology adoption decision and strengthen the level of adoption among smallholder farmers.