Soil acidity is one of the major soil chemical degradation problems affecting soil productivity in the Ethiopian highlands, particularly in the study area. So, the amendment of these soils is of paramount importance to enhance their productivity. This study was conducted during the 2020 cropping season to determine the effects of lime and compost on selected soil properties and bread wheat (Triticum aestivum L.) yield in acidic soil of Banja District, Northwestern Ethiopia. The experimental design was a randomized complete block design with three replications. Four levels of lime (0, 0.79, 1.58, and 3.17t ha-1) and three levels of compost (0, 5, and 10t ha-1) combined. Soil samples were collected from 0-20cm depth and analyzed before planting one composite sample, and after crop harvest, soil samples were also taken from each experimental unit to examine the effect of lime and compost application. Soil samples were analyzed for pH, exchangeable acidity, and Al3+, bulk density, organic carbon, total nitrogen, and available phosphorous, cation exchangeable capacity and exchangeable base based on standard laboratory procedures. At 5t ha-1 compost and 3.17t ha-1 lime, the pH value increased from 4.74 to 5.54, while exchangeable acidity and Al3+ were reduced to their initial values by 1.91cmol (+)kg-1 and 1.83cmol(+)kg-1, respectively. In agronomic data analysis, days to maturity, panicle length, number of effective tillers, thousand seed weight, biomass yield, grain yield, straw yield, and harvest index were significantly affected by the main effects of lime, compost, and their interaction effect. The highest grain yield was obtained from the combined application of 10t ha-1 and 3.17t ha-1 of lime, which increased grain yield by 267.7% as compared to the control plots. Furthermore, grain yield is highly and positive correlated with biomass yield (r=.981), straw yield (r=.935), harvest index (r=0.9); whereas, negatively correlated with exchangeable acidity, aluminum, and bulk density. Among the twelve treatments, the highest yield of wheat was obtained from the combined application of 3.17t ha-1 lime and 10t ha-1 compost. However, the cost of this treatment was 18559 Birr ha-1, while the cost of 10t ha-1 compost was 10000 Birr ha-1. Application of compost was found to be economically feasible, with a net benefit of 70330.7Birr ha-1. Therefore, compost application of soil was an efficient and economically affordable rate for small scale farmers.