We studied food security and biodiversity conservation from a social-ecological perspective in southwestern Ethiopia. Specialist tree, bird, and mammal species required large, undisturbed forest, supporting the notion of ‘land sparing’ for conservation. However, our findings also suggest that forest areas should be embedded within a multifunctional landscape matrix (i.e. ‘land sharing’), because farmland also supported many species and ecosystem services and was the basis of diversified livelihoods. Diversified livelihoods improved smallholder food security, while lack of access to capital assets and crop raiding by wild forest animals negatively influenced food security. Food and biodiversity governance lacked coordination and was strongly hierarchical, with relatively few stakeholders being highly powerful. Our study shows that issues of livelihoods, access to resources, governance and equity are central when resolving challenges around food security and biodiversity. A multi-facetted, social-ecological approach is better able to capture such complexity than the conventional, two-dimensional land sparing versus sharing framework.