Carbon credit-based policies are important to driving sustainable practices worldwide. These policies have in the past focused mainly on wetlands, forests, and other ecosystems, neglecting agroforestry—which is a climate-smart and agroecological practice. This paper therefore seeks to examine how carbon credit-based policies can drive sustainable agroforestry through an in-depth empirical review of literature. It was found that the most common carbon credit-based policies and schemes are government-led, including the CCER (China Certified Emissions Reduction), ETS (EU Emissions Trading System), and the California Global Warming Solutions Act in the United States of America. These schemes focus on heavy emitters such as transportation, steel, and cement. Carbon credits guiding carbon credit-based policy formulation and implementation are mainly: Credits from avoided emissions (not cutting down trees); credits from reduced emissions (energy-efficient technologies); and credits from removed emissions (tree planting and carbon capture tech). Factoring in these 03 main types of carbon credits into the carbon credit policy framework will drive sustainable agroforestry across the world in general and the developing world in particular, as smallholder agroforestry farmers will be encouraged to practice agroforestry. One of the main stumbling blocks to the practice of agroforestry is the financial cost involved in its establishment and management, which the carbon credit scheme would offset. Besides driving sustainable agroforestry, carbon credit-based policies in the domain of agroforestry would provide other co-benefits such as employment generation; technology transfer; improved energy security and access to energy services; improved livelihoods; improved air, water, or soil quality; and infrastructure development.