Background: Exclosures are among degraded land rehabilitation strategies which are practiced in Ethiopia. However, due to lack of environmental and socio-economical virtues most exclosure are attributed negatively by local people and hence their sustainability left at risk. A study was carried out on two selected kebeles to investigate the effectiveness of exclosure in achieving the goal of environmental conservation and improving community livelihood strategy. Stratified random sampling was employed for the selection of sample households in two kebeles and they were surveyed using semi-structured questionnaires. Additionally, focus group discussions and key informant interviews were also administered. In all, a total of 96 households (70 non-participants and 26 participants) were interviewed. Data were presented in descriptive statistics. Results: The study showed that the majority of the local communities living next to exclosure were dependent on subsistence farming system mainly crop cultivation and animal rearing, but a few were participated in exclosure activities as a means of their livelihood strategy. Conversely, a majority of the household heads (66%) had a wish to participate in exclosure developmental activities. Conclusion: To ensure the sustainability of exclosure local community’s participation and beneficiary involvement is mandated in almost all exclosure activities but it has not been proved very significant in practice. Therefore, rehabilitating of degraded areas by exclosure can be successfully realized through greater participation and involvement of the local communities, and it becoming environmental soundness, economic viability and social acceptability.