Land degradation is one of the most important factors responsible for the alarming situation of food security, human health, and socioeconomic development in the country. Currently, 120.7 M ha of land in the country is affected by land degradation, out of which 85.7 M ha of land is affected by soil erosion caused by water and wind. Moreover, physical, chemical, and biological degradation are the major forms of land degradation in the country. Deforestation or tree cover loss (2.07 M ha) from 2001 to 2021, intensive rainfall (>7.5 mm ha−1), uncontrolled grazing (5.65 M ha), indiscriminate use of fertilizers (32 MT year−1), and shifting cultivation (7.6 M ha) are other major factors that further aggravate the process of land degradation. In order to alleviate the problem of land degradation, numerous agroforestry technologies have been developed after years of research in different agroclimatic zones of the country. The major agroforestry systems observed in the country are agri-horticulture, silvipasture, and agri-silviculture. This review indicates the potential of agroforestry in enhancing carbon sequestration (1.80 Mg C ha−1 year−1 in the Western Himalayan region to 3.50 Mg C ha−1 year−1 in the island regions) and reduced soil loss and runoff by 94% and 78%, respectively, in Northeast India. This can be concluded that the adoption of the agroforestry system is imperative for the rehabilitation of degraded lands and also found to have enough potential to address the issues of food, environmental, and livelihood security. This review’s findings will benefit researchers, land managers, and decision-makers in understanding the role of agroforestry in combating land degradation to enhance ecosystem service in India and planning suitable policies for eradicating the problem effectively.