Currently, inorganic nitrogen fertilizer becomes a serious threat to the environment and human health. Thus, finding alternate source of nitrogen is a viable option in assuring sustainable agricultural system. Biological nitrogen fixation is a critical and key process in sustainable agricultural systems in tropical soils, which are frequently deficient in N and susceptible to leaching of plant nutrients. This process transforms atmospheric nitrogen to ammonia, nitrate and nitrogen dioxide. Several key abiotic and biotic factors limit legume productivity and biological nitrogen fixation in World agriculture, especially in sub-Saharan Africa. Within the soil, rhizobia frequently encounter various stresses that affect their growth, initial steps of symbiosis and capability of nitrogen fixation. Biotic and abiotic stresses impose a major threat to agriculture and symbiotic nitrogen fixation is dependent on host cultivar and rhizobia, but as well may be limited by pedoclimatic factors. The most common factors affecting biological nitrogen fixation and symbiosis activity in western parts of Ethiopia are soil acidity, quality of inoculants and low soil fertility. In most cases, the microsymbiont is the more affected partner, with plants growing on mineral N usually less sensitive to these stresses. Thus, it can be concluded that, particularly in a western part of Ethiopia, many studies should be focused on acidity related constraints on biological nitrogen fixation, screening of acid tolerant inoculants and low soil fertility improvements to enhance biological nitrogen fixation in smallholder farming system.