This study tries to portray the interaction between smallholder agriculture andrnextension service in Achefer Woreda of Amhara Region. Different methods of datarncollection are employed to generate reliable data to the description of the interactionrnbetween extension service and smallholder agriculture. The study also reviews therntheoretical background and the Ethiopian experience in agricultural extension.rnThe study focuses on two areas. The first area is the description and analysis ofrnthe socio-economic factors, which may hinder or facilitate the adoption of innovation.rnThe second point is the socio-economic impact of extension service on smallholderrnagriculture with in the framework of agricultural extension.rnThe study identifies land and oxen as a major constraint to the adoption innovation.rnAlthough labour is an important factor in smallholder agriculture, it is not found in thernkebele as basic as land and oxen in the adoption of innovation. The local arrangements inrnthe form of wonfel,lemena ,wobera allows the flow of labour among households in criticalrntimes. Timad as a means of access to both land and oxen allow the flow of these resourcesrnamong households. Mekenajo as a means of access to oxen also has enabled the twornhouseholds to combine their single ox resources for mutual benefit. It argues that some ofrnlocal arrangements like timad as access to oxen shed light on the prospect of overcomingrnoxen constraints with the proper adoption of innovation. It also describes credit andrnmarketing as one of important factors to the adoption of innovation. This study identifiesrnthat a delay on the availability of inputs is a major constraint in the adoption ofrninnovation. It demonstrates that agricultural extension is a very good institution tornimprove the smallholder agriculture in the kebele, though it has limitation in somernaspects.rnThe study has also demonstrated the considerable impacts of extension service onrnthe smallholder agriculture. It describes its impact in the form of cultivation, Productivity,rncropping patterns and household economic improvements. It also identifies areas likernagricultural implement where agricultural extension has not yet made significant impacts.rnSome of the impacts seem to lack continuity. It argues the need to address some problemsrnassociated with the impact of extension service on dietary changes and decline ofrnproductivity.rnThe role of the extension service in the study area in terms of introducing betterrnnatural resources management practices is very minimal and insignificant as compared tornits impact on crop production. Change in the level of productivity has also brought improvements in the household economic status. The study has also identified some of therntrends in socio-cultural changes, resource utilization and household furniture