Promoting sustainable agricultural practices such as agroforestry (AF) could improve long-term productivity, enhance a sustainable rural livelihood and reduce pressure on natural resources and ecosystems in the tropics. However, AF seems to have adoption problems due to external market forces, lack of skills, financial resources and know-how ending in low flexibility and discontinuity of farmers in practicing AF. The objective of this study is to identify social, institutional, and economic factors that influence the adoption of AF on the household and community level, taking the region Alta Verapaz in Guatemala as a case study. Alta Verapaz is amongst the poorest regions in the country but also a tropical biodiversity hotspot where current agricultural practices are threatening forest environments and social development objectives. Our study explores how capital accessibility and institutional incentives are related to farmer’s livelihood sustainability and AF compositions. The methodology is composed by semi-structured interviews with nineteen farmers and field observations. The interviews have been analysed based on a qualitative content analysis by using the inductive category development. Based on these outcomes, the study found that human and economical capitals are favoured in communities were institutions are present especially through AF training offers, creation of farmers cooperatives and economic incentives. The role of institutions resulted to be crucial in the promotion of organic AF methods, forest protection and creation of long-term income. The combination of agricultural diversification with institutional incentives is one key livelihood strategy adopted by the farmers in order to achieve a socio-economic and ecological sustainability of their households. The further promotion of community forestry projects, expansion of networks and ongoing agricultural trainings as well as the diversification of agricultural systems could be beneficial for farmers in Alta Verapaz.