A study was initiated in Yelmana Densa and Farta Districts of northwestern Ethiopia to assess the adoption of improved wheat varieties and inorganic fertilizer, factors affecting adoption, and ways in which research, extension, and policy could improve adoption. The study relied on primary data obtained from a random sample of 200 farmers and on secondary data on agricultural production and the study area. Adoption of improved wheat varieties increased from less than 1% in 1981 to 72% in 1998 and grew rapidly after the new national extension package program commenced. Adoption of chemical fertilizer had increased in the study area from less than 1% in 1976 to 77% in 1998 and had also grown markedly since the national extension package program came into effect. Over 93% of adopters of improved wheat varieties also used chemical fertilizer on their farms. The adoption of an improved wheat variety and use of chemical fertilizer were systematically related. Results of a logistic model showed that adoption of improved wheats was positively and significantly affected by farm size, farmers participation in on-farm demonstrations, and contacts made with extension agents, service cooperative representatives, or peasant association chairmen. Attendance at an agricultural training course, radio ownership, membership in a producer cooperative, farm size, total livestock units owned, and access to credit exerted a significant influence on the adoption of chemical fertilizer. To increase the flow of information to farmers (and the adoption of new technologies), the extension package program needs further strengthening. An efficient marketing system for inputs and outputs would benefit farmers by facilitating higher prices for marketed wheat and reducing the cost of fertilizer. The agricultural research system should put more emphasis on solving the problems of wheat producers and increase the frequency with which it releases new varieties that resist diseases and pests, yield well, and tolerate drought. To make the research effort more successful, seed of new varieties must be produced in sufficient quantities and quality for producers. To achieve this goal, the government must provide incentives and support to public and private seed companies, including infrastructure and credit. The formal credit system must address the credit constraints of smallscale farmers and increase awareness about the types of credit available for agricultural production. In addition, the government should encourage farmers to form service cooperatives or farmers’ groups to reduce transaction costs and improve loan recovery rates.