•We conducted a cluster randomized controlled trial (RCT) to examine impact of extension services and Development Agents on adoption of new variety.•Improved extension services result in higher propensity to adopt the new improved variety.•Improved capacity of Development Agents exerts a positive and statistically significant impact on adoption of the new improved variety.•Wealthier households benefit from improved capacity of Development Agents and extension services. Although many studies have shown that sub-Saharan African countries could increase agricultural productivity and output through better technologies and improved crop varieties, the adoption of yield-enhancing technologies by smallholder farmers in the region still remains very low. In this paper, we use a cluster randomized controlled trial to examine whether improved extension services influence smallholder farmers’ decisions to try a newly introduced improved wheat variety in Ethiopia. The experiment involved demonstration trials and field days, and improved capacity of Development Agents in facilitation and communication skills. The empirical results revealed that farmers’ decisions to try the newly introduced wheat variety were highest in the villages where demonstration trials and field days, and improvements in the Development Agents’ facilitation and communication capacity were introduced simultaneously. We also found a positive effect of improved extension services on yields, and the use of chemical fertilizer, herbicides and pesticides, but only the use of herbicides and pesticides were statistically significant. Our findings provide some insights into the significance of revisiting the curriculums of the Technical and Vocational Education and Training, and Farmers’ Training Centers.