Land degradation is a complex issue caused by diverse drivers, each of which should be considered in the analysis of land sensitivity to degradation. This study identifies the areas most sensitive to land degradation in the Grdelica Gorge and Vranjska Valley, which are unique in terms of natural and socioeconomic conditions. Land-use changes and inappropriate land management have led to serious degradation in this region. The flexible and multifactorial approach of the Mediterranean Desertification and Land Use (MEDALUS) model allowed comprehensive land degradation sensitivity analysis in the study area. The main factors driving soil degradation were assessed by estimating climate quality index, soil quality index, and vegetation quality index, and the main socioeconomic indicators by management quality index and social quality index. The results showed that forest cover is the main factor to contrast land degradation, and even minor adverse changes in forest characteristics, such as structure, canopy cover, health, and quality, could trigger degradation processes. The vegetation quality index was defined in terms of the current vegetation’s capacity to protect soil from erosion, drought resistance, and fire risk. Detailed data on forest vegetation cover was obtained from the National Forest Inventory (NFI). The environmentally sensitive area (ESA) index generated through the analysis classified 26.11% of the total study area as critical, 69.53% as fragile, and 2.70% as either prone to or unaffected by degradation processes. According to the ESA index, the areas covered by forests with optimal species composition and high canopy cover were the least susceptible to degradation. The areas under intensive agricultural production without any application of conservation measures were the most susceptible to degradation. Future strategies for optimal land-use patterns are discussed, such as the intergration of woody species in croplands to protect soil against degradation and meet human needs in the areas prone to degradation.