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Land fragmentation is high and increasing in the Gamo Highlands of southwest Ethiopia. We postulate that this substantial land fragmentation is obstructing the adoption of sustainable land management practices as climate adaptation measures. To explore this, a mixed method study was conducted with emphasis on a multivariate probit model. The results indicate that farmers adapt to climate change and variability they perceive. According to the probit model, there is no clear answer to the question whether land fragmentation facilitates or obstructs adoption of sustainable land management practices. Yet, a qualitative analysis found that farmers perceive land fragmentation as an obstacle to land improvement as adaptation strategy. Moreover, farmers invest more in land improvement on plots close to their homestead than in remote plots. However, the higher land fragmentation also promoted crop diversification, manure application and terracing. Although exogenous to farmers, we therefore suggest that land fragmentation can be deployed in climate change adaptation planning. This can be done through voluntary assembling of small neighboring plots in clusters of different microclimates to encourage investment in remote fields and to collectively optimize the benefits of fragmentation to adaptation.