Abstract This study analyzed the determinants of the adoption rate of improved agricultural technologies among farmers in Gubalafto woreda and the impact of adoption rate of technology on the welfare of households in the study area. The data used for the study were obtained from 343 randomly selected sample households in the study area. Multiple linear regression model was employed to analyze the determinants of farmers’ decisions to adopt modern technologies. Regression result shows that from eleven explanatory variables nine variables such as sex of HH, family size, education level, social network, income, extension service, credit service, Market distance and farm size are significant at 5%level of significance. Except Market distance all significant variables affected adoption rate positively. Based on these findings it is recommended that the zonal and the woreda leaders extension agents farm and education experts, policy makers and other development oriented organizations have to plan in such a way that the farm households in the study area will obtain sufficient education, credit accessibilities and also have to train farmers to make them understand the benefits obtained from adopting the new technologies. These bodies have also to arrange policy issues that improve farm labor participation of household members and also to arrange the ways in which farmers obtain means of income outside farming activities.