Factors influencing dairy technology adoption and impact on milk yield were studied in 240 smallholder farms in Dejen district, Ethiopia. The majority of the smallholders had more than 20 years of farming experience and were living at more than 10 km distance from market or trading centers (67% and 54% in that order). The dairy technologies studied included the use of crossbred animals, improved feed technologies and improved management practices. Application of acaricides, deworming, vaccination, heat-detection and haymaking had wide application (more than 80% adoption levels) while urea straw treatment, silage making, rotational grazing and fodder beet development were the least practiced ones. Only 20 percent of the cows were crossbred animals. It has been found that higher level of technology adoption is associated with better milk yield regardless of the breed of cattle (local or crossbred) owned by the farmers. Milk yields in local breeds increased by 0.07 times when the number of technologies increased by one unit. In crossbred cows, this rate of increase was five fold higher (0.38 times for one unit increase). Correlation coefficients between and within farm household characteristics and technologies adoption were, generally, significant. Male-headed households adopted significantly higher number of technologies than female-headed households (P < 0.001). Technology adoption rates increased significantly with increased education level and family size and decreasing distance from market or trade centers (P < 0.01). The level of technology adoption by smallholder farmers is still unsatisfactory and is highly dependent on gender, family size and level of education of smallholder farmers and location of farms.