Biodiversity in urban gardens can play a vital role in the fight against hunger and diet-related health problems. A study was undertaken to assess the species composition and diversity of homegardens in Bahir Dar City. Interviews were administered to 178 sample households residing in 7 Sub-cities covering 12 former kebeles, and inventories made on fruit species in gardens and types of other higher plant and livestock species recorded. The plant component was found to be dominant with 58 higher plant species of various use; 17 fruit (28.8%), 12 miscellaneous-use (20%), 11 vegetable (18.6%), 11 medicinal (18.6%) and 8 spices/condiments (13.6%). The most abundant perennial plant species was mango (20.8%) followed by guava (13.4%), avocado (11.6%), papaya (11.2%) and Persian Lilac (9.9%). Especially, the City gardens were found to offer a unique opportunity for preservation of medicinal & aromatic plants. There however appears a competition and substitution between horticultural and other crops like Chat in the outer city gardens. Generally, the study revealed that the urban gardens are a storehouse of biodiversity including species that run the risk of disappearance in the natural habitat. It is suggested that City development planning considers urban gardening so as to create a biodiversity-friendly gardens that offer a wide range of ecosystem services.