Small holder farmers in Ethiopia can’t increase their productivity and income due to lack of agricultural mechanization, even though agricultural mechanization has crucial socioeconomic benefits. The traditional method of harvesting makes it difficult to perform various farm operations in a timely manner, resulting in worsening loss of crops on farms during harvesting and threshing. The adoption and impact of agricultural mechanization on smallholder farmers' crop productivity and income have not been adequately studied. The major objective of this study was to assess the impact of combine harvester custom hiring on households' crop productivity and farm income. As well, the study examined the smallholder farmer's decision to hire a combine harvester and its financial profitability. Multi-stage sampling was used to gather data from 450 households in seven sample kebeles from Gozamin, Baso Liben, and Debre Elias districts in northwestern Ethiopia. Descriptive statistics, inferential statistics, binary logit model, truncated Poisson model, and an endogenous switching regression (ESR) model were used to analyze the data. The logistic result shows that the educational status of the household head, immediate access of the combiner, average field distance to the main road, fear of unseasonal rain, extension contact, and mobile phone possession had a significant positive effect on the hiring decision of combine harvester. On the other hand, the male household head and the active family labor force impacted the hiring decision of a mechanical harvester negatively. In the truncated regression, active family labor force, oxen, immediate access, type of combiner leaser, and straw waste suspicion were significant determinants of the intensity of custom hiring on the farmer's wheat plots. According to the ESR model results, adopters' crop productivity and farm income increased by 5.60 quintals per hectare and 12764.34 birrs as a result of hiring combine harvesters. Non-adopters would also gain 6.10 quintals per hectare and 8051.82 birrs if they had been hired. The hiring of combine harvester technology has an indispensable contribution to the improvement of smallholder productivity and income and it is financially profitable. The government, private stakeholders, and other concerned parties should facilitate the custom hiring of existing machinery; besides importing or manufacturing agricultural machinery that is well suited to the Ethiopian agricultural system perspective so as to separate farmers from oxen and change traditional agriculture practices.