BackgroundHangadi watershed is endowed with the only virgin forest in Odo shakisso harbouring high biodiversity, but it has been suffered from anthropogenic activities. This study was conducted to investigate composition and community diversity of woody species in restoration for posterity. Satellite images of 1988, 2008, and 2018 were used to classify and analyse trends of deforestation. For both woody species and topsoil (0–30 cm), 20 m × 20 m, 100 plots laid at every 300 m along line transects, 1 km apart from each other. In each sample plot, woody species ≥ 3 m were counted, Shannon–wiener diversity index, cluster analysis and ordination were computed.ResultsAgroforestry is found to be the dominant land use/land cover class followed by forest and cultivated land. A total of 61 woody species belonging to 34 families; 8.2% of the species were endemic to Ethiopia. The highest number of species was recorded from families Euphorbiaceae and Rubiaceae (5 species, 8.2%), Rutaceae, Celastraceae, and Oleaceae (3 species, 5.08%) followed by Flacourtiaceae, Meliaceae, Araliaceaae, Myrsinaceae, Moraceae, Boraginaceae, Asteraceae, Spontaceae, Lauraceae and Sapindaceae (2 species each). Four woody plant communities were identified using free statistical software R version 3.1.1. The canonical correspondence analysis result showed that EC, pH, OM, altitude, C:N, CEC, sand, silt, AvP, and TN significantly affected species distribution in the watershed.ConclusionLocal people involved in cutting mature woody species for timber production, making farm implements and, cultivated land expansion. Protection of woody species diversity of forest and coffee systems with low biodiversity value conservation concepts are recommended to be executed jointly by local people and stakeholders.