Economic development is turning into a more regional phenomena. Through active community participation, it brings about a change in the locus of responsibility for development planning from the national to the sub-national or local levels. Nevertheless, Wolaita Sodo town hasn’t done enough research on community involvement with sustainable LEDs. Thus, the purpose of this study was to evaluate the present level of community involvement in LED, examine the function of community participation in sustainable LED, and pinpoint the key variables influencing community participation in Sustainable LED in Wolaita Sodo town. Economic development is turning into a more regional phenomena. Through active community participation, it brings about a change in the locus of responsibility for development planning from the national to the sub-national or local levels. Nevertheless, Wolaita Sodo town hasn’t done enough research on community involvement with sustainable LEDs. Thus, the purpose of this study was to evaluate the present level of community involvement in LED, examine the function of community participation in sustainable LED, and pinpoint the key variables influencing community participation in Sustainable LED in Wolaita Sodo town. Data from primary and secondary sources were gathered in both qualitative and quantitative formats. Questionnaires and checklists were used to gather data from sample respondents and relevant government offices. Techniques for multi-stage sampling were used to reach the sample size of 203 households. In addition to employing both descriptive and inferential statistics, a binary logistic regression model was utilized to examine the information gathered through the use of a questionnaire. Results revealed that 72.5% of the residents took part in LED efforts by making monetary or in-kind contributions. Furthermore, even if it is not a continual contribution, communities supply 33 percent of the total funding required for the development project to be carried out in their areas, with the government providing the remaining 27 percent. This is a clear sign of how the community is participating in the research area. Regarding the community’s role in LED, the results demonstrated that participation fosters a sense of ownership and organized performance, aids in social and personal empowerment, and creates locally based and owned development through resource mobilization—all of which contribute to sustainable development. The results also demonstrated that a number of factors, including income, attitude, level of awareness, interest in participating, leadership structure, monitoring and evaluation, partnership structure, and directives, were positively and significantly correlated with community participation in sustainable LED. Therefore, the government and other relevant authorities should actively work on awareness creation forums, knowledge and skill development training, community empowerment, and technical support in order to enhance community engagement. These are the main recommendations offered to improve community participation.