Soil erosion by water is the most pressing environmental problem in Ethiopia, particularly in highlands where topography is highly rugged, population pressure is high, steep lands were cultivated, rainfall is erosive , soil type is erodible , poor soil conservation practices are adopted and land use land cover change (LULCC) is accelerated. Assessment of impact of LULCC on soil loss and expansion of Lake Boyo was done in Shashogo Woreda, southern Ethiopia. To analyze LULCC during 1973-2005, landsat images of 1973, 1984 and 2005 were used and found that land use/land cover classes bare land, cultivated land and water body were increasing on expense of decrease in wet grass lad, bush lands and grazing lands. Universal Soil Loss Equation (USLE) model was to analyze the rate of soil loss in 1973 and 2005 using Geographic Information System (GIS) and remote sensing. The finding revealed that the annual mean soil loss which was 3.33t/ha/y in 1973 was increased to 13.41t/ha/y in 2005 due to LULCC and poor soil conservation practices. This implies that erosion model (USLE) predicted an increase in the amount of soil loss due to LULCC during 1973-2005. For validity, the current result was compared with earlier findings in the same agro-ecological regions and found a good agreement. Thirty micro-watersheds were delineated to analyzed and identify sever erosion areas for prioritization for conservation purpose. The result showed that mean annual soil loss rate is highest at upstream of Guder river and it is even higher that upper limit of the tolerable range (>16t/ha/y). To access trend of expansion of Boyo Lake, satellite images of 1973, 1984, 2000 and 2005 were used and found that the lake is expanding exponentially through time causing pressure on other land use/land cover classes. The increasing of the annual mean soil loss rate at upstream of Guder River increased the downstream sedimentation impact in Boyo lake and could be the cause for the expansion of Boyo Lake. Mean annual soil loss from each land use/ land cover class was analyzed and found that bare land have the highest rate of soil loss and highest next to cultivated land in contributing total soil loss in the study area.