The study was carried out to quantify the carbon stock and sequestration potential of the multifunctional agroforestry (MFA) system established for small and marginal farmers in Tamil Nadu, India. The MFA consists of 316 multi-utility trees and shrubs across four quadrats and border trees on a 0.75 acre land. The results showed significant variation in the above-ground and below-ground carbon stock among the different tree and shrub species. Neolamarckia cadamba recorded the highest above and below-ground stock of 70.65 kg tree-1 and 18.37 kg tree-1, respectively. The total carbon sequestered by the vegetation was 3.82 tons (3823.94 kg), with the highest contribution from Quadrat II (1591.85 kg) and the lowest from border trees (132.30 kg). The soil organic carbon (SOC) stock decreased with increasing depth, with the maximum stock observed in the 0–20 cm layer. The total change in SOC stock from the MFA during the study period was 12.99 mg ha-1, with a carbon sequestration rate of 0.18 mg ha-1 yr-1. The total carbon revenue from the vegetation and soil was estimated at US$ 311.4 (US$ 140.3 from vegetation and US$ 171.1 from soil). The findings highlight the significant potential of MFA systems in carbon sequestration and mitigation of climate change, particularly for small and marginal farmers in developing countries.