Experts generally agree that increased concentrations of greenhouse gases (GHGs) in the atmosphere will result in changes in the earth‘s climate. Increased attention by policy makers to this threat of global climate change has brought with it considerable attention to the possibility of using forests as a means of sequestering and reducing emissions of carbon dioxide in the atmosphere. As globally important storehouses of carbon, forests play a critical role in influencing the Earth's climate. Reducing GHGs can be achieved by controlling and avoiding land use changes. In many parts of the world, forests are being rapidly cleared for agriculture or pasture, destructively logged, and degraded by human-set fires. When forests are degraded or cleared, their stored carbon is released back to the atmosphere during harvest and through respiration, thus these forests are net contributors of carbon to the atmosphere. Forestry is an important sector in Kenya. The long term development of the forestry sector will definitely affect the future amounts of carbon sequestration and emission of the country. The purpose of this study was to provide an understanding of the role that Kakamega forest can play in the mitigation of climate change through carbon sequestration. It evaluates potential economic value of carbon sequestration of Kakamega forest as well as the potential of the forest to participate in carbon trading. In addition, the study investigated the status of the carbon stock in the forest, based on the biomass stock. The study adopted the tobit model to estimate the determinants of the total amount carbon that can be sequestered by trees in farms. The study confirms the huge atmospheric CO2 that can be offset by the Kakamega forest, indicating the potential of Kenya to participate in carbon trading for both its economic and environmental benefit. The results further indicate that the major determinants of the amount of carbon that can be sequestered by trees in farms are the sex of the respondent, position of the respondent in the household, source of income, tenure status of the farm, and perception on whether trees can reduce global warming. The results of the study can expedite policy decisions regarding Kenya‘s participation in carbon trading through the Clean Development Mechanism (CDM) as well as providing benefits to the national forestry sector, as well as the private owners and participants in the community forestry, in terms of an overall increase in income, and achieving self-sufficiency.