Watershed development is an important component of rural development and natural resource management strategies in many countries. The study was conducted to investigate the current situation of Warja watershed for further improvements to promote Sustainable and productive livelihood through the integration of different watershed components in participatory approach. Household interview and biophysical resources assessment followed by watershed mapping techniques were used for the data collection. Purposive sampling methods were used to select 63 households and Warja watershed boundary was delineated and its map was developed based on the preliminary outlet identified with the help of GPS reading. Descriptive statistics and diversity indices were used for data analysis. The results of the study indicated that Agriculture was the principal occupation (98.4%) of the population of Warja watershed. The average farmland size was 1.9 hectares while 25% of the households have farmland ranging from 0.25 to 1 hectare. The minimum and maximum family size of the sample farm households was 2 and 16 respectively. The common types of off-farm income generating activities are petty trade and working as daily labor. Slope gradient of Warja watershed ranges from 0 to more than 30 and the slope gradient of 2-5 and 5-10 cover the greatest in area coverage representing 204ha and 145ha respectively. Soil laboratory analysis result showed that sandy loam was the major soil type of Warja watershed. Overall results concluded that land degradation and biodiversity loss were a serious concern and watershed management programs could be strengthened. Awareness creation and strengthening capacity of rural communities on integrating crops, livestock and natural resource management technologies for effective soil and water conservation measure should be enhanced through participatory integrated watershed management approach.