<p>This study explains agroforestry adoption and rejection among smallholders by examining the behavioural pathways that shape decision-making and by deriving policy-relevant insights. Anchored in the Theory of Planned Behaviour and extended to incorporate loss aversion, the analysis focuses on how cognitive evaluations, social influence, perceived constraints, and risk sensitivity jointly influence farmers’ intentions and realised behaviour in dryland contexts. The results indicate that farmers’ intention to adopt agroforestry is positively shaped by attitudes, subjective norms, and—most strongly—perceived behavioural control, highlighting the importance of farmers perceived ability to manage financial, regulatory, and technical challenges. Intention significantly increases the likelihood of adoption, confirming its mediating role between psychological predispositions and behaviour. At the same time, loss aversion behaviour exerts a strong negative influence on actual adoption, explaining why many smallholders refrain from adopting agroforestry despite recognising its long-term advantages. The influence of subjective norms is found to be conditional: supportive peer experiences and favourable social expectations promote adoption, whereas unfavourable norms discourage uptake. Complementary analysis of perceived barriers identifies prolonged gestation periods, lack of immediate income, competition with food crops, water scarcity, and theft risks as key factors reinforcing rejection decisions. The findings imply that agroforestry policies must move beyond technology dissemination to explicitly address behavioural constraints. Interventions should enhance farmers perceived behavioural control through regulatory clarity, tailored finance, and technical support, mitigate loss aversion via risk-sharing and income-smoothing mechanisms, and leverage peer learning and social norms to create supportive environments for sustained agroforestry adoption.</p>