Although boundaries are considered important semi-natural environments and refugia for biodiversity in areas dominated by intensive agriculture, the ways local communities manage species diversity has received little attention. Hence, this study has characterized major boundary types and the associated woody species diversity and socioeconomic role of boundary agroforestry in northwestern Ethiopia. One hundred and twenty households were randomly selected for household surveys and vegetation inventories were carried out in 80 purposively selected boundary agroforestry sites. Variation in Simpson, Shannon–Wiener and Evenness indices among boundary types was analyzed using one-way ANOVA. Four different boundary types were identified, based on place and purpose of establishment. Altogether, 58 woody species representing 33 families were recorded. The mean number of woody species was 22, while the mean Simpson, Shannon–Wiener and Evenness indices for woody species were 0.61, 2.33, and 0.67, respectively. Survey results showed that woody species diversity was significantly higher in homestead boundaries. Lower diversity was calculated for in-farm boundaries. Similarity in composition of woody species among boundary types ranged between 0.33 and 0.38. Eucalyptus globulus ranked first in terms of the Importance Value Index, while Justicia schimperiana was the most woody woody species. Private production of seedlings was the main source of planting material for establishment of boundaries. Tending, pruning, pollarding, coppicing, and firming were the most important management practices. Seventeen use types were recorded, each represented by 6–56 species. Boundary agroforestry constitutes 9.40% of the annual income for the local community. Generally, the study showed that boundaries accommodated high species diversity and are important for household livelihood improvement, beautification of landscapes and biodiversity conservation in arable landscapes.