This study assesses the effects of community-based watershed development (CBWD) on landscape greenness and vegetation cover in the northwestern highlands of Ethiopia. It also evaluates implications of results on ecological conditions and rural livelihoods. Paired-sites comparison approach was used, and compared landscape greenness and vegetation cover at conserved (Tija Baji) and non-conserved (Tata) watersheds for the period 2000–2015. Landsat images for 2000 and 2015 were the datasets used, and analyzed using geographic information systems (GIS). Normalized difference vegetation index (NDVI) was employed to detect landscape greenness. The results showed that landscape greenness represented by high NDVI value (> 0.02) increased in the conserved watershed and decreased in the non-conserved watershed during the study period. The observed change in landscape greenness in both watersheds was due to the change in shrub land and grassland covers. Shrub land and grassland covers increased by 20.6 ha and 22.5 ha in the conserved watershed and decreased by 50 ha and 49.3 ha in the control watershed, respectively. The decreasing change in landscape greenness in the control watershed was due to the conversion of shrub land and grassland into cropland and bare land covers. Cropland and bare land covers in the control watershed increased by 41.9 ha and 26.7 ha, respectively. In contrast, these land covers declined by 30.4 ha and 23.3 ha in the conserved watershed, respectively. The observed changes in landscape greenness, cropland and bare land covers in the conserved watershed have important implications for the improvement of soil fertility, biodiversity, soil erosion and flood control, ground water recharge, carbon sequestration and on rural livelihood systems.