Understanding the complex diversity of species and their potential uses in traditional agroforestry systems is crucial for enhancing the productivity of tropical systems and ensuring the sustainability of the natural resource base. The aim of this study is the evaluation of the role of home gardens and parklands, which are prominent tropical agroforestry systems, in the conservation and management of biodiversity. Our study quantified and compared the diversity of woody and herbaceous perennial species and their uses in traditional home gardens and parkland agroforestry systems under a sub-humid climate in western Ethiopia. A sociological survey of 130 household respondents revealed 14 different uses of the species, mostly for shade, fuelwood, food, and as traditional medicine. Vegetation inventory showed that the Fisher’s α diversity index and species richness were significantly higher in home gardens (Fisher’s α = 5.28 ± 0.35) than in parklands (Fisher’s α = 1.62 ± 0.18). Both systems were significantly different in species composition (Sørenson’s similarity coefficient = 35%). The differences occurred primarily because of the high intensity of management and the cultivation of exotic tree species in the home gardens, whereas parklands harbored mostly native flora owing to the deliberate retention and assisted regeneration by farmers. In home gardens, Mangifera indica L. was the most important woody species, followed by Cordia africana Lam. and Coffea arabica L. On the other hand, Syzygium guineense Wall. was the most important species in parklands, followed by C. africana and M. indica. The species diversity of agroforestry practices must be further augmented with both indigenous and useful, non-invasive exotic woody and herbaceous species, particularly in parklands that showed lower than expected species diversity compared to home-gardens.