Many forest communities in Sarawak, and globally, practise some form of smallholder management system including agroforestry. Yet, agroforestry practitioners predominantly focus on non-timber crops as the major source of income while the timber output remains underutilized and understudied. Smallholder timber agroforestry systems, therefore, have huge potential to equitably meet the increasing demand for both timber and food while reducing the pressure on natural forests. We investigate the readiness of agroforestry smallholders in Sarawak to supply timber commercially, and the opportunities and challenges they face. Semi-structured interviews were conducted with Sarawak forestry stakeholders including agroforestry farmers, timber industry actors, civil society organizations, academia, and government agencies. Descriptive statistics are used to analyse the data. Our results demonstrate that smallholders in Sarawak lack technical silvicultural and horticultural knowledge and formal timber market access, despite majority smallholders expressing interest in timber production. The underutilization of smallholder timber is linked with conservation and protection objectives. Legal constraints, limited capacity building and lack of market information were cited as major barriers for smallholders. Key recommendations to lower barriers for smallholder participation include provision of resources and an enabling legal framework that harmonizes agriculture and forestry demands while being inclusive of smallholders’ perspectives and realities.