Widespread deforestation and increasingly intensive use of land to sustain a growing population has increased soil erosion, lowered soil fertility, and reduced agricultural productivity in the hills of Nepal. This has raised concern over the sustainability of the hill farming system. There is growing evidence that agroforestry can be a potential solution to these problems. However, the development of agroforestry as a viable alternative for farmers in diverse ecological and socioeconomic conditions has become a very challenging issue. The objective of this paper was to identify factors influencing the adoption of agroforestry by subsistence farmers in the hills, with reference to an agroforestry project initiated by Nepal Agroforestry Foundation. Necessary information for this study came from a survey of 223 households (82 project and 141 non-project) from Kumpur, Nalang, and Salang villages in Dhading district in 1998. The results showed that male membership in local non-governmental organizations (NGOs), female education level, livestock population, and farmer's positive perception towards agroforestry have significantly positive effects on adoption of agroforestry among project households. However, the number of children below 5 years of age, number of males aged 10-59 years, male education, female's NGO membership, and respondents' age had significantly negative effects. Among non-project households, those with more livestock and male membership to local NGOs were found more likely to adopt, while the households headed by males were less likely to adopt agroforestry.