Soil acidity is the major challenge in the highland areas of Ethiopia which is potentially limiting soil fertility and agricultural productivity. As a result, soil acidity and the associated soil infertility problems are the major challenges to crop production such as barley (Hordeum vulgare L.) in the northwestern highlands of Ethiopia. In response to this problem this study was conducted on acidic soils of Sanket Lideta kebele Banja district northwestern Ethiopia to evaluate the main and/or interaction effects of different rates of lime and vermicompost (VC) application on soil properties and yield and yield components of barley (Hordeum vulgare L.) during the 2020 cropping season. The factorial combinations four rates of lime (0, 50, 100 and 150% or converted to 0, 0.93, 1.86 and 2.79 t ha-1) and three rates of VC (0, 2.5 and 5 ton ha-1) were laid out in randomized complete block design with three replications. Representative soil samples were taken at a depth of 0-15 cm before the application of treatments and after harvesting as well as the agronomic data were collected with the appropriet time. The data were analyzed using SAS computer software version 9.4. The results revealed that the application of lime and VC significantly increased soil pH, total nitrogen (TN), organic carbon (OC), available phosphorus (P), cation exchange capacity (CEC), Exchangeable cations and decreased bulk density, exchangeable acidity and Al3+. The analysis of variance for agronomic data showed that plant height, number of seeds per spike, grain and straw yield, harvest index, 1000 grain weight, and protein content were affected by the interaction effects of lime and VC. While spike length, effective tiller, biomass yield and hectoliter weight were affected by the main effects of lime and vermicompost. Grain yield was positively correlated with pH (0.851***), TN (0.74**), OC (0.57*), available P (0.65*), CEC (0.87***), Ca (0.68*), Mg (0.69**), Na (0.91***), and K (0.59*), but negatively correlated with exchangeable acidity (-0.94***), Al3+(-0.90***) and bulk density (-0.59*). Grain yield was also highly correlated with seed number (0.84***) and biomass yield (0.92***). The lowest grain yield (3635.4 kg) was found from the control plots. But, the highest grain yield (5097.5 kg) was recorded from 1.86 lime and 5 VC t ha-1 treatment combinations. The application of (0.93 t ha-1) lime and 5 t ha-1 VC was found to be highest net benefit (90997.9 ETB with acceptable MRR for the Sanket Lideta Kebele which improves nutrients of soil and is economically feasible. It is recommended that the experiment needs to be conducted on the same plots at least for one additional season to reach a final conclusion.