Food and nutrition insecurity hamper human productivity and social development. Ethiopia is among the countries most affected by food insecurity and malnutrition. Nutrition-sensitive interventions have the potential to tackle the underlying causes. The study evaluates national policy and strategic responses to food and nutrition security and examines the sensitivity of smallholder agricultural production to nutrition in northwest Ethiopia. Drawing from primary and secondary sources of data, a mixed research approach was used. For the household survey, 478 sample households were drawn using a systematic random sampling technique. A household survey was the main data collection method. Focus group discussions, key informant interviews, observation, and document reviews were also conducted. The analysis was performed using the farm production diversity score, the household dietary diversity score, and Simpson’s diversity index. For count data, the Poisson regression model was employed to analyze the effect of production diversity on dietary diversity, while other models such as binary logistic and multiple linear regressions were used to identify determinants of household production and consumption. Thematic analysis was primarily used in policy analysis. The study revealed that, nationally, Ethiopia has progressively taken various strategic directions to address the ongoing food and nutrition challenges by devising nutrition-specific and nutrition-sensitive programs under a multi-sectoral approach. However, more has been said than done. The policy directions, strategic objectives, and initiatives have not been adequately translated into practices because of institutional, managerial, and coordination inadequacies, as well as emerging priorities like an outbreak of a pandemic and political instability. The average food-based crop and livestock production of households is 43.53 quintals and 6.24 tropical livestock units, respectively. Households produce 6.08 food groups in a year. The average consumption score within a 24-hour period is 6.88 food groups out of 12. Production and dietary diversity indices are found to be 88.6% in a year and 89.3% within a 24-hour period, respectively. Households utilize 8.7% to 99.1% of their own food products. Production diversity in households is determined by the age of the household head, sex, year of schooling, number of oxen, contacts with agricultural extension agents, irrigation, and availability of animal feeds. Dietary diversity in households, on the other hand, is influenced by farming experience and the number of cows and poultry owned. There is a positive and statistically significant association between farm production diversity and household dietary diversity (p = 0.000). The production pathway to nutrition-sensitive agriculture is also hampered by technological, institutional, managerial, environmental, and climaterelated challenges, which include dependency on rain-fed and free-grazing-based traditional herding systems. The study concludes that smallholder agricultural production in northwest Ethiopia is nutritionsensitive but not adequate to supply sustainable quantities. Improving agricultural extension services, promoting small-scale irrigation schemes, and creating market access by introducing improved animal feeding with improved crop and livestock management techniques could significantly contribute to increased household availability of diversified foods and ensure food and nutrition security.