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Unsustainable utilization of solid biomass fuels with inefficient traditional cookstoves has long been a major challenge to ensuring energy and environmental security in Ethiopia. Against the backdrop of this problem, several models of improved biomass cookstoves (ICSs) have been developed and distributed in the country. Yet, little is known about the effect of these ICSs on household's fuelwood consumption and the environment. The aim of this study was to examine the potential woodfuel savings, economic and environmental effects of three ICSs (Mirt, Gonziye, and Tikikil) in rural Ethiopia from a cross-sectional study of 605 sample households and direct energy consumption measurements in four rural districts. Inferential statistics and cost-benefit analysis were used to analyse the data. The results showed that compared with the traditional open fire tripod; the use of ICSs could reduce household's fuelwood consumptions on average by 1.72–2.08 tons per household per year. These fuelwood savings translate to potential emissions reductions of 2.82–3.43 tCO2e per stove per year. The results from the cost-benefit analysis (CBA) indicated that investment in these ICSs could provide a net economic benefit of ETB 7204 to 10,381 (US$ 265 to 382) during the 2–5 years lifespan of the stoves. The benefit-cost ratios of these ICSs were calculated between 16.5:1 and 35.0:1. The implication is that promoting the use of Mirt, Gonziye and Tikikil stoves is a viable option and an essential component of the strategy for improving the energy-efficiency and well-being of rural communities while also contributing to the sustainable utilization of biomass resources, and mitigation of climate change in Ethiopia and beyond. • Improved cookstoves (ICS) reduce fuelwood consumption by 1.72–2.08 tons/year. • ICSs could save emissions of 2.82–3.43 tCO2e per stove per year. • ICSs provide a net economic return of US$ 265 to 382 during 2–5 years lifespan. • ICSs are viable option for improving energy-efficiency and sustainable biomass use. • ICSs should be key element of the climate change mitigation in Ethiopia. [ABSTRACT FROM AUTHOR]