BackgroundRural landscapes, particularly those close to human settlements and main roads throughout the highlands of Ethiopia, appear greener than the outfields because of eucalypt plantations. The most common factors for eucalypt plantations are two: fuel and construction demands and to generate income. ObjectiveThis study tried to investigate the socioeconomic impacts of eucalypt plantations in Western Gurage Watersheds located in Central-south Ethiopia. The specific objectives are: to evaluate the socioeconomic importance of eucalypt plantations on the livelihood of farm households, and to assess perceptions on impacts of eucalypt plantation and copping strategies. MethodsSystematic and purposive sampling method was employed by selecting households with eucalypt woodlots from the list of each Woreda's Kebeles. Close- and open- ended questionnaires were distributed to every fifth households that possessed eucalypt plantations. Three hundred eighty three questionnaires were distributed and collected from households found in three Woredas (districts) namely Cheha, Enemorna Ener, and Eza located in the Watersheds. To supplement the information critical observations, discussions with focus groups and interviews with key informant were employed. The survey data were analyzed using both qualitative and quantitative techniques. To describe data acquired from critical observations, focus group discussions and key informant interviews; critical and logical qualitative data analysis technique were used. Descriptive and dispersive statistics such as frequency, percentage, mean, variance, standard deviation, p- value and correlation were employed using SPSS Version 20. ResultsThe result showed that eucalypt plantation dominated fuel wood and construction consumption and substituted further encroachment to natural forests. From multiple responses given, households prefer planting eucalypts to indigenous trees because it is fast growing (100 %), profitable (100 %), needs lesser labor (100 %), needs lower capital (100 %), can be used for multipurpose (100 %), and coppice itself fatly (93 %). They rated income gained from eucalypt as 2nd next to enset. ConclusionsHouseholds may continue planting the species particularly for fuel wood and construction need since substituting it by other alternative seems not feasible and challenging. To sustain the livelihood and environment; appropriate management like site selection and substitutions by horticultural and cash crops using micro irrigation schemes for market needs are recommended. Conducting in-depth participatory research and specific policy ratification and promulgation on eucalypt plantations will sustain its utilization and curb the drawbacks.