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Smallholder farming constitutes an important but marginalized sector, responsible for most of the world’s agricultural production. This has a significant influence in the land use/cover change process and agrobiodiversity conservation, especially in mountainous regions of the developing world. Thus, the maintenance of sustainable smallholder farming systems represents a key condition for sustainable land management and to safeguard the livelihoods of millions of rural households. This study uses a combination of biophysical and socioeconomic data based on household interviews to compare 30 highland agroforestry systems and 30 conventional agriculture systems, to determine which system provides better conditions to support sustainable livelihoods for smallholder farmers. The interview data is based mainly on the perceptions of Kayambi indigenous farmers who use these farming systems to support their livelihoods. Independent-Samples t Test and descriptive statistics were applied to analyse the data from 60 farms. The results indicate that agroforestry systems contain greater agrobiodiversity; more diversified livelihoods; better land tenure security and household income; more diversified irrigation sources and less dependency on rainfall than conventional systems. These findings highlight the role of agroforestry systems in supporting sustainable livelihoods of smallholder farmers in mountainous areas.