In the Ethiopian highlands, more than 50% of the land area is covered by Afromontane vegetation, with dry evergreen Afromontane forests and grassland complex (DAFs) accounting for the largest coverage, most biodiverse, and centre of endemism. However, these forests have experienced extensive forest degradation due to various anthropogenic activities. The study sites belong to DAFs and characterized by rugged and mountainous terrain that have experienced significant degradation primarily by human-driven factors. In response, the Ethiopia government has initiated sustainable soil management strategies and vegetation restoration programs over the past decades to tackle these challenges. Therefore, this study was aimed at evaluating the role of forest exclosures in enhancing the status of woody species, soil quality, biomass accumulation, and the land use land cover (LULC) changes and the accompanying ecosystem services values (ESVs) in the dry evergreen Afromontane forests of the northeastern highlands. Three forest exclosure treatments, exclosure for ten years (EX10), twenty years (EX20), thirty years (EX30), and open woodland (OWL) as a control were purposively selected and used to gather woody species composition and structure, soil properties, and biomass accumulation data across two slope orientations. The study, further, assessed the impact of land use/land cover (LULC) changes from 1984 to 2021 on ecosystem service values (ESVs) in the region using satellite images. The findings showed that sixty-one woody species from 34 families were identified across the study areas. The study showed the positive influence of exclosures on density, basal area, and regeneration of woody species. However, no substantial changes were noted in diameter at breast height (DBH) and most functional traits. Nonetheless, both DBH and functional traits exhibited a gradual increasing trend with increasing exclosure ages. Similarly, soil quality improved over forest exclosure ages in that the soil exhibited an increased soil pH, organic carbon (SOC), total nitrogen (TN), available phosphorous (Av.P), and exchangeable bases. Six woody species community types were identified across the study sites. The results also demonstrated elevation and edaphic factors, including sand, soil bulk density, calcium, and soil pH as the most significant explanatory variables in shaping woody species community patterns. Accordingly, exclosure areas exhibited higher biomass accumulation and carbon storage compared with the open woodland area. In addition, structural equation models revealed DBH as a significant predictor of aboveground biomass. The findings showed a substantial increase in cultivated land and built-up areas, while forested areas and water bodies experienced significant declines, especially in the first phase between 1984 and 2001. These changes resulted in a dramatic decrease in ESVs from 54.4 million USD in the stipulated period. However, the status of forestland showed a marked improvement in the second phase as a result of the xv implementation of various sustainable forest restoration initiatives in the region. The findings of the present study highlighted the potential of exclosures-based forest restoration in enhancing the distribution of woody plant species, improving key indicator species, enriching soil properties, and fostering biomass accumulation. These findings underscored the urgent need for integrated land-use policies that prioritize biodiversity conservation and the sustainable management of ecosystem services amid ongoing land degradation. Furthermore, it calls for the establishment of comprehensive frameworks to mitigate deforestation and land degradation, providing a benchmark for assessing the progress toward national forest restoration targets by 2030. Ultimately, such efforts have the potential of dual benefits of improving local livelihoods while ensuring long-term ecosystem stewardship and resilience