Agroforestry has been recognized as one of the most important systems to support livelihoods of many rural farmers in the Nepalese hills. However, its conservation value has received little attention. Moreover, there is no solid information that tells us precisely as to how agroforestry system has changed over time, and what are its causes and consequences in terms of biodiversity conservation and livelihood improvement. Hence, this paper aims to investigate the changing impacts of agroforestry systems on improving people’s livelihoods and delivering biodiversity conservation outcomes. This research analyses a case study of a local government area of Mahadevsthan in Kavrepalanchok district of Nepal. Mixed methodological approach (household survey and PRA) was used for data collection. The results indicate that the practice of agroforestry system has changed considerably over time, as a result of which more number of agroforestry species have appeared in private lands. A total of 145 different species were recorded, of which 56 species were medicinal plants followed by fodder trees and grasses, and fruit trees.  Study further revealed that species richness has increased mostly in upland terraces. This resulted in increased livelihood benefits to local people.  The meat production from goat and milk from buffalo have increased considerably. The high income benefit is mainly associated with introduction of various fodder trees and grasses in private farmlands. It is concluded that there is a great need for agroforestry system to integrate conservation benefits with livelihood of rural people. One way to promote this integration is to improve policy and practices with a view to initiate and support farming co-operatives in the commercialization of agroforestry products and market the conservation values in the changing climatic context.