Land degradation has been a global agenda. It has been affecting both developed and developing nations (including Ethiopia). The overall objective of the study was to assess the impact of landscape restoration (including area closure) on the environment and farmers‘ livelihood in Hita-Borkena watershed, northeastern Ethiopia. Three Landsat images (1986, 2001 and 2015) were used to detect land cover dynamics. Laboratory analysis of selected soil physico-chemical properties were made to compare the soil properties of closed/restored and open grazing areas. Household questionnaire was administered to investigate environmental problems before and after landscape restoration, the role of area closure and different conservation measures, and the impact of the restoration on farmers‘ livelihood. A total of 255 household heads were selected randomly for the questionnaire survey. This survey was also substantiated by interviewing agricultural experts, observation and reviewing reports prepared by Kalu District Agriculture Office. Both descriptive and inferential statistics were employed to analyze quantitative data. Besides, qualitative approach was implemented in order to analyze qualitative data. The study found out that forestlands and shrublands shrunk through 1986 – 2015, grasslands expanded mainly due to the implementation of area closure under MERET project since 2001. The study revealed that better organic matter, total nitrogen, clay and silt contents, CEC and total porosity were recorded under area closure than under open grazing land. However, both available P and K were found minimum under the former land use type. This may be due to the reason that such nutrients exist more in unavailable form or it may be because of the fact that large amount of those nutrients are extracted by the restored vegetation. The study showed that rates of soil erosion, overgrazing and illegal cutting of trees were relatively higher before landscape restoration. The respondents also appreciated the positive role of land restoration in improving the fertility of the soils of the study watershed and then the positive impact to their livelihood. Based on the results of the study, it is recommended that similar restoration activities shall be implemented in similar environments in Ethiopia to improve both the environment and farmers‘ livelihood / Geography / Ph. D. (Geography)