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This paper presents an assessment of smallholder farmers’ perceptions of climate change, its impacts on agricultural production and adaptive responses in the central highlands of Ethiopia. The findings show that increased temperature and decreased rainfall are widely held perceptions; all respondents stated that they had observed increase in temperature and decrease in annual and seasonal rainfall amounts. The major impacts of climate change on local livelihoods as reported by respondents include decline in the length of growing period, increased crop damage by insects and pests, and increased severity of weed infestation. Some respondents also reported an increase in the incidence of livestock diseases. The adaptive responses by the smallholder farmers to the perceived or experienced climate change include adjustments in crop and livestock production activities, and investments in sustainable land management at household and community levels. Despite the range of autonomous adaptive responses adopted, climate change is negatively affecting smallholder agriculture, and thus rural livelihoods, in the study area, indicating the need for planned adaptation interventions.