Establishing exclosures has become common rehabilitation and restoration of degraded lands in Ethiopia. This study examined the effects of exclosure on identified soil physical and chemical properties, and woody diversity at the Wamole sub-watershed. Representative soil samples were taken from the open grazing land and eight-year-old exclosure. Six transects and 18 plots, with an area of 20 m × 20 m and containing nine from each open grazing ground and nine from the exclosure, were constructed alongside to sample the vegetation. From every plot, by ‘X’ design, composite soil samples were collected for investigation of total nitrogen (TN), available phosphorus, cation exchange capacity (CEC), soil pH and soil organic carbon content (SOC), and the bulk density (BD) of the soil, 18 undisturbed soil samples were taken from 0 to 20 cm deep. 34 and 28 woody species belonging to 25 and 20 families were registered between exclosure and adjacent open grazing land respectively. Significantly (P < 0.05) higher Index Shannon-Wiener (3.36) in the exclosure indicated better species diversity in the exclosure than in the open grazing land (3.13). Soil properties such as available phosphorus, pH, OC, TN, and CEC showed significant differences (p < 0.05) across different land uses. Exclosures facilitated to reclaim of degraded lands by re-establishing vegetation and improving soil nutrient status in a comparatively short period. It suggests that further research on socio-economic aspects of exclosures has to bring livelihood improvement in the locality to establish additional degraded open grazing lands in the research sub-watershed.