Land degradation due to accelerated soil erosion is a major socio-economic development and environmental sustainability threat in the highlands of Ethiopia. To reverse these problems several types of sustainable land management (SLM) practices have been implemented in the past 50 years. The interventions were critical to reduce runoff and soil loss and improve soil moisture and land productivity. The study focuses on evaluating the impact of biophysical land management practices on soil erosion and soil moisture in the Guder and Aba Gerima watersheds. Runoff plots were established in the three selected SLM technologies (5 plots on soil bund spacing [27.2, 12.7, 7.87, and 5.45 m], 12 plots on 3 cover crops [bitter lupin, vetch, and sweet lupin], and 3 plots on Acacia decurrens [AD] plantation). From each plot daily runoff and soil loss data were measured. Composite soil samples were collected from the cover crop (CC) and AD plots for pH, organic carbon (OC), total nitrogen, and available phosphorus analysis. For soil moisture analysis 1080 and 366 disturbed soil samples were collected at depths of 0 to 0.5 m and 0 to 0.6 m (at 0.1 m intervals of soil profile) from CCs and soil bund (SB) plots, respectively. The results revealed that SBs and CCs substantially reduced surface runoff. Soil bunds were more effective in reducing runoff than CCs and AD. Year 3 and 4 AD plantations were the least in reducing runoff loss even lower than the control plots. Slope length between consecutive SBs also affects the efficiency of SBs in reducing runoff loss (the narrowest the most efficient). The narrowest SBs, bitter lupin CC, and year 1 AD (better understory vegetation) show the best performance in reducing soil loss. Wider SB spacing, low biomass-producing CCs, and older AD (low understory vegetation and water infiltration) have less efficiency in reducing soil loss but were better than the control. The average seasonal soil water significantly (P < 0.05) decreased with increased SB spacing. In this study, CCs had no substantial effect on soil water content. Cover crop treatments significantly improved OC, total nitrogen, available phosphorus, and dry organic biomass addition. Similarly, OC, total nitrogen, and available phosphorus were improved in AD plots compared to the control. The soil fertility improvement due to SLM practices affects crop yields positively. Adopting optimum SB spacing and fast-growing leguminous CCs (bitter lupin) provides the best economic and environmental benefits. However, further studies will be required to prove the integration impacts of physical with biological SLM practices in different biophysical settings.