This study explored the relationship between dairy technology adoption (DTA), crop diversification and food security among smallholder farmers practicing mixed agriculture in Bason Werana Woreda, North Shewa Zone, Amhara Region. A systematic sampling method selected 252 households from two randomly chosen government administrative areas (kebeles), proportional to size. Data were analysed using descriptive statistics and an endogeneity-corrected recursive conditional mixed process regression model to examine bidirectional causation. Findings showed a 34% adoption rate of dairy technology, with improved housing and vaccination being the most common, while artificial insemination and improved breeds had the lowest adoption. The Herfindahl Iindex for crop diversification was 0.31, indicating a lower-middle level. Food security analysis, based on the Food Consumption Score, revealed that 78.57% of households were food secure, while 16.27% and 5.16% had borderline and poor food security, respectively. The regression results indicated that DTA significantly improves food security, and vice versa, but no causal relationship was found between these factors and crop diversification. The study identified key household-level and policy-related variables that are critical for enhancing DTA and addressing food insecurity. Overall, the findings underscore the importance of designing and promoting context-specific, locally optimal agricultural strategies that are closely aligned with household characteristics. Such alignment is essential for advancing dairy sector development and improving the welfare of smallholder farmers in Ethiopia.