Protected areas in South Asia face significant challenges due to human disturbance and deforestation. The ongoing debate surrounds the recent surge in illegal encroachment of forest buffer zones in the Musali divisional secretariat division (DSD), which has led to a significant loss of forest cover over the past three decades. In this context, detecting changes in forest cover, assessing forest health, and evaluating environmental quality are crucial for sustainable forest management. As such, our efforts focused on assessing forest cover dynamics, forest health, and environmental conditions in the DSD from 1988 to 2022. We employed standardized image processing techniques, utilizing Landsat-5 (TM) and Landsat-8 (OLI) images. However, the forest area in the DSD has shown minimal changes, and environmental conditions and forest health have illustrated considerable spatial-temporal variations over the 34 years. The results indicated that 8.5 km2 (1.9%) of forest cover in the DSD has been converted to other land use classes. Overall, the Normalized Difference Vegetation Index (NDVI) has declined over time, while Land Surface Temperature (LST) exhibits an increasing trend. The regression results demonstrated a robust inverse relationship between LST and NDVI. The declining vegetation conditions and the increasing LST contribute to an increase in environmental criticality. The derived maps and indices will be beneficial for forest authorities in identifying highly sensitive locations. Additionally, they could enable land use planners to develop sustainable land management strategies.