Despite many anthropogenic pressures in diverse land-use types, agroforestry practices and remnant forests have played significant roles in biodiversity conservation and climate change mitigation. This study aimed to examine the floristic composition, structure, and carbon stocks of tree biomass along environmental gradients in the Kibate Forest and assess the land use and land cover (LULC) dynamics and traditional agroforestry practices across the two agroecological zones in Wonchi District, Ethiopia. Sixty-six (30 × 30 m) plots were established every 100 m distance interval in five transects using systematic sampling for data collection in Kibate Forest. Landsat images were acquired from Earth Explorer and the changes were quantified for the years 1985, 2001, and 2019. Post-classification techniques were employed using ERDAS Imagine 2015, version 15.0, and ArcGIS 10.4.1. A ground survey was conducted with 100 key informants who were selected from 10 sites using a purposive sampling method. Ten sites were selected in the two agroecological zones using a stratified random sampling method. A total of 125 vascular plant species belonging to 104 genera and 52 families were identified in Kibate Forest. Eighteen species were endemic to the Flora area. The two most dominant families, Asteraceae (29 species) and Lamiaceae (eight species) accounted for 30% of the total number of species. The highest numbers (54%) of species were herbs. Of the four community types (viz., Olinia rochetiana-Myrsine melanophloeos, Ilex mitis-Galiniera saxifraga, Erica arborea-Protea gaguedi, and Hagenia abyssinica-Juniperus procera), the highest species richness (82%), evenness, diversity, endemic taxa, and importance value index were recorded in community types 2 and 4. The results showed that environmental variables such as altitude, slope, human impact, and overgrazing by livestock, both with interactions and without interactions significantly (p < 0.05) affected species richness. The mean total tree biomass was 91.9 ± 10.01 Mg. The mean total C stock was 45.9 ± 5.17 Mg ha−1, out of which 38.3 ± 4.31 and 7.7 ± 0.91 Mg ha-1 were stored in above- and belowground C pools, respectively. Total C stock showed a significant (p = 0.04) weak positive correlation with species richness. The highest C stocks (67.4%) per species were contributed only by four species (Juniperus procera, Ilex mitis var. mitis, Nuxia congesta, and Olea europaea subsp. cuspidata). In traditional agroforestry systems, a total of 103 agroforestry plant species belonging to 44 families were documented in the two agroecological zones, 74 were indigenous including seven endemics and 29 exotic species. Fabaceae was the most represented family (13 species) in the agroforestry systems. A mixed farming system was the most frequently (56%) reported source of income. The results of LULC changes from 1985 to 2019 showed that the agroforestry cover and settlement cover including road construction increased with an annual rate change of 0.3 and 2.7%, respectively. These changes corresponded with a decreasing trend of the land covered by forest, cropland, water body, and shrub at a rate of 4.7, 1.3, 0.8, and 0.5%, respectively. Anthropogenic factors are the main drivers and threats to remnant forests in the study area. In conclusion, reducing anthropogenic pressures, the heightening agroforestry practices uniformly, sustainable forest management, and conservation measures through community-based participation should be considered. Typically protecting and planting indigenous and multipurpose plant species are essential as restoration techniques for degraded land-use types.