Rapid urbanization drives land use and land cover (LULC) change that intensifies Land Surface Temperature (LST), effects, and thermal stress on urban populations. In Bahir Dar City, Ethiopia, three decades of urban expansion have altered the local thermal environment, yet its integrated effects on thermal variability and human well-being remain poorly understood. This study examined these effects using multi-temporal Landsat imagery (for 1995 and 2005, land sat 5 and for 2015, and 2025 Landsat 8 and 9) classified with the Random Forest algorithm via Google Earth Engine. Spectral indices (NDVI, NDBI, and MNDWI), LST, UHI, and the Urban Thermal Field Variance Index (UTFVI) were analyzed, a CA-Markov model predicted LULC and LST for 2045, and a household survey assessed resident’s thermal well-being. Built-up areas expanded by 349% (9.53% to 42.80%) between 1995 and 2025, while agricultural land declined by 66.4% and water bodies by 47.7%. LST rose by 3–4.22°C, from 1995 to 2025, concentrated in built-up zones. UTFVI results indicate poor-to-worst thermal quality across most of the city. NDVI and MNDWI correlated negatively with LST, while NDBI showed a strong positive correlation. CA-Markov projections confirm continued expansion and rising LST through 2045. Classification accuracy reached 95.55% (Kappa: 93.86%) in 2025. Survey findings showed that rising temperatures caused thermal discomfort, disturbed sleep, and reduced productivity. Working-age adults (31–45 years, M = 3.86) and labour workers (M = 3.82) were most affected. Urbanization is the primary driver of thermal climate variability in Bahir Dar City. Expanded green infrastructure, water body conservation, and climate-sensitive urban planning are recommended to mitigate heat stress and safeguard human well-being.