In Tepi, in the Southwestern part of Ethiopia, traditional farming prevails. Advancing the production of spices in the existing coffee-based farming system provides opportunities to improve livelihoods financially, while also advancing the natural resource base such as soils, biodiversity and carbon sequestration. Regenerative agriculture and food system practices have great potential to address the low productivity and quality of smallholder farming systems and their limited participation in appropriate markets while preserving a healthy environment. The region is however affected by several barriers related to food system transformation like extreme poverty, heavy dependence on traditional farming practices, lack of sufficient extension support, low literacy levels, weak coordination and collaboration among key value chain actors/stakeholders, poor market linkage and lack of sufficient awareness on the benefits of regenerative/ecological farming. The living lab reshapes the innovation process: a collaborative action of stakeholders who develop and learn together to improve their own situation for the benefit of the food system.