It is widely recognized that agroforestry (AF) provides smallholder farmers with an array of social, economic, and ecological benefits. This study was aimed to assess the socio-economic and environmental benefits, conduct an investment analysis, document tree management operations, and examine the factors influencing the adoption of AF practices in the Eastern escarpment of Chercher Massive, South-East Ethiopia across four districts and six kebeles. A mixed method approach was employed to collect data from 432 respondents. The results revealed fifteen socio-economic and six environmental benefits of AF farms were mentioned. The uses of AF as source of cash, food, timber and firewood became the most prevalent ones. Farmers also plant trees on their farmland to get environmental benefits with the use of shade (90.7%) being the most frequently mentioned followed by soil erosion control. The finding also demonstrated that AF farm households mean annual net income was about 18.25% higher compared to the non-AF farm households. The analysis of the Benefit–Cost Ratio also showed that the AF farm households were found to be about 21.62% higher compared to that of the non-AF farm households indicating that farmers can decide to adopt AF practices. The AF farmers implement six main tree management strategies to maintain trees on their AF farms with pruning being the most implemented tending operation (90.5%), followed by thinning (80.6%). The Problem Facing Index (PFI) was used to identify and rank the farmers problems in implementing AF practices with longer rotation age of trees, lack of need assessment on the types of tree seedlings and the absence of nearby tree nurseries being the most severe problems. The binary regression model also indicated that demographic, socioeconomic and institutional characteristics of the households were found to affect the adoption of AF practices. However, the influence of access to irrigation services and improved seedlings were statistically insignificant. It is crucial to prioritize the development of farmer-based management strategies that integrate trees, crops, and livestock in order to produce highly demanded products and services for both socio-economic and environmental benefits of the farming households. The results may aid stakeholder in making sound decisions that will enhance rural livelihoods.