In most parts of Ethiopia, people are dependent on eucalyptus as a source of woodlots, fuel, constructing houses as well as for socio-economic benefits. Due to this, eucalyptus plantations expand from time to time in the highland areas of Ethiopia, and the conversion of farmlands into eucalyptus woodlots has raised a great concern. However, the impact and the trend of eucalyptus plantation on agricultural land have rarely studied. Hence, the main objective of this study is to assess the impacts of the expansion of Eucalyptus plantation on agricultural land in the highland areas of Dega Damot District, Ethiopia. The research relied on a mixed-research approach. Both socio-economic and spatial data were utilized. The socio-economic data were analyzed using descriptive statistics. Supervised image classification with a maximum likelihood algorithm was employed to classify land use/land cover types. The spatial data analysis result indicated that grazing land and bush lands are declined overtime, whereas the areal coverage of farmland was increased from 71.79% in 1990 to 80.16% in 2014 and it declined from 2014 to 2021 by 4.08% of change. In contrary, eucalyptus plantations were expanding throughout the study period. Eucalyptus has expanded from 1.11% in 1990 to 5.33% in 2021, with 352.47% change. Grazing land was decreased from 1990 to 2021 with 62.39% change. Bush land decreased from 14.20% in 1990 to 6.8% in 2021. The empirical data analysis result also indicated that the majority (90.7%) of the communities are planting eucalyptus rather than other indigenous trees. According to the key-respondents the eucalyptus tree are planting in degraded land, on grazing land, along roadside, on woodlands, around the course of streams, and on farm land. About 84.5% of the respondents still have the intention to plant more eucalyptus in the future due to economic importance of eucalyptus identified as the main driving force of expansion. This shows that communities are intensively converting their farmland to eucalyptus woodland and this creates a huge negative impact on agricultural land. These call an intervention and effective agricultural land use planning and management policies in accordance with eucalyptus plantation.