This study was conducted in Dhabe Dongore catchment, in Adama area to analyze the impact of sustainable land resources management on agricultural production and rural livelihood. The study is based on a comparison of land management practices of communities in Dhabe Soloke Kebele and members of Sulula Golba Guda (SGG) who organized themselves to manage their land resources, in Dongore Denku Kebele. The Data was generated through socioeconomic survey including a household level semistructured questionnaire, PRA methods such as focus group discussion, informal interviews and biophysical survey that include soil quality analysis and gully erosion quantification. Nearly all farmers indicated that deforestation is a major and common problem that causes severe land degradation in both study areas. Conversion of the forest to farmland, indiscriminate cutting of trees for fuel wood and charcoal making and inappropriate agricultural practices are the main causes of deforestation, mentioned by the respondents. Removal of nutrients, poor soil nutrient and organic matter management, poor use of manure and compost, lack of management of crop residues and inappropriate agronomic practices are common problems in both study areas. But the analysis has showed that members of SGG have a better coping mechanism or management strategies to mitigate the mentioned problems. The community based management of grazing land and forest undertaken by members of SGG is found to be more effective and enables the sustainable utilization of the resources than practiced by farmers of Dhabe Soloke. Laboratory analysis of soil samples from the farm fields of members of SGG has shown significant difference in organic matter content, CEC, exchangeable cations and available potassium compared to soils in Dhabe Soloke (p<0.05). The increase ranges from 7 per cent in CEC to 51 Per cent in organic matter content. This difference is due to the difference in land management practices that enhanced the chemical properties of the soil. Soil analysis results of nitrogen, phosphorous and bulk density did not show significant differences. Results of gully quantification indicated that, a large volume of soil and a large surface area of land (12.22 tons/ha and 209.12m2/ha respectively) is lost from the unmanaged cultivated lands of Dhabe Soloke as compared to the volume of soil (5.01 tons/ha) and surface area of land (160.83 m2/ha) lost in Dongore Denku (SGG). Members of SGG have gained about 40 percent increase in annual income compared to farmers in Dhabe Soloke that resulted from increased crop land productivity due to the improved soil quality. A yield decline reported by 76 per cent of respondents of Dhabe Soloke indicates the poor productivity of soil of their cropland that resulted from poor soil nutrient management and conservation measures. The analysis in general reveals that integrated community based land resource management enhances improved agricultural productivity and rural livelihood.