Wetland disturbance, degradation, and losses affect wetland-dependent plant and animal species. This study explored the extent of wetland area changes and diversity of plant and bird species in Kafa Zone—one of the most biodiversity-rich area in Ethiopia. Wetland size change and plant and bird species assessment were conducted at two wetlands: Alemgono and Doil following standard scientific procedures. In the past 15 years, 10.2–325.07 ha of wetland areas were converted to other land forms for various uses. The wetlands comprise 36 plant species belonging to 18 families and 56 bird species. Human disturbances and colonization of nonhydrophytes remained as major problems of the wetlands. Alemgono wetland was composed of a large number of plant species with high richness and evenness, whereas Doil wetland contained relatively few species, low richness, and high dominance. Unlike Alemgono, Doli wetland has high bird species richness, evenness, and low dominance. Based on the IUCN (International Union for Conservation of Nature) Red List criteria, 1.82% of birds of the study wetlands were critically endangered, 5.45% were vulnerable, 1.82% were near threatened, 80% were least concerned, and 10.91% were not assessed. This reveals that wetlands of the study area are the habitat for globally threatened bird species and that appropriate conservation measures are needed to save these species.