Bamboos are most important non-timber forest products, providing food, raw materials, and shelters for a good part of the world’s population. It grows quickly, sequester more CO₂, more profitable and can be harvested annually as compared to other tree species. The economic viability of bamboo (Dendrocalamus strictus) based agroforestry system was studied during 2007-2010 in semi-arid region of central India. The growth and quality of D. strictus, planted at 10×10 m and 12×10 m spacing, did not vary significantly either grown as sole or with intercrops. However, total culms were higher in sole bamboo and growth of bamboo was better in 10×10 m spacing. Reduction in grain yield of sesame was 9.24, 20.16, 19.88% and in chickpea was 4.53, 6.92, 8.15% over that of sole crop after one, two and three years of plantation, respectively. Maximum reduction in intercrop yield was recorded nearby (0.5m distance) of bamboo clumps, while there was no reduction in crop yield at ≥3 m distance from bamboo clump. The economics of the bamboo based system indicated that during initial three years, benefit-cost ratio (B:C ratio) of chickpea intercrop varied from 2.05-2.86 as compared to B:C ratio (2.13-3.60) of sole crop. The B:C ratios of sesame intercrop varied from 1.14-1.95 as compared to B:C ratio 1.43-2.43 of sole crop. Bamboo will compensate the monetary losses of intercrop, through the harvesting of culms. Thus, total returns will be much higher than sole cropping. Soil pH, organic carbon and available phosphorous increased, while EC decreased in sole bamboo and intercropped area. Maximum improvement in soil quality was under sole bamboo. Large row spacing (≥10 m) and low spacing between plants within lines is recommended for cultivation of intercrops for longer period. Planting of bamboo lines in east-west direction will reduce shade effect. Both will increase economic returns. Bamboo based agroforestry will act as buffer for the farmers of drought prone areas, conserve and enrich soil and improve environment.