In recent years, there has been a growing realization that improving market access for smallholders will lead to improvement in income and food security. However, market failure often limit smallholders’ fair access to market opportunities. To address this problem, a market-oriented agroforestry action research program was implemented in six sites of Kavre and Lamjung districts of Nepal between 2013 and 2016. The main objective of this paper is to investigate the changing impacts of the market-oriented agroforestry system on improving people’s livelihoods and addressing food security issues. The net-margin analysis of five priority products of agroforestry systems indicated that farmers benefitted most by a banana-based high yielding fodder system (56%) followed by Alnus-cardamom system (48%), tomato-fodder and buffalo (36%), chilli-fodder (26%) and ginger-based (25%) systems due to facilitation of market-oriented agroforestry action research services. The impact of market-oriented agroforestry intervention from a survey of 289 households, revealed that household income was increased by 37–48%, which can provide up to six additional months of food to the poorest households. This innovation has the potential to take the majority of households (63%) out of the poverty cycle while avoiding food shortage during the year. The implications of the study are that farmers must be united for collective marketing of their production and develop marketing strategies to eliminate middle men for better return. Some key lessons learned for the success of this research include farmers’ own motivation, favorable environment, and the inclusion of social activities and incentives for cultivating priority products species.