Inadequate supply and poor quality of available feed resources is the major challenges affecting livestock productivity in Ethiopian smallholder farmers. To combat this problem, field experiments were carried out in two watersheds of Ethiopia's Upper Blue Nile basin to assess the effects of farmyard manure (FYM) and Desmodium intortum (Green leaf Desmodium) intercropping on agronomic, nutritional value, and soil properties of Napier and desho grass, as well as their effects on natural pasture improvement. In the first experiment Napier (Pennisetum purpureum (L.) Schumach.) and desho (Pennisetum pedicellatum Trin.) grasses were evaluated on cultivated land under FYM and green leaf Desmodium intercropping for the morphological characteristics, dry matter yield (DMY), crude protein yield (CPY), nutritional value, in vitro gas fermentation, as well as their effects on soil physicochemical properties. For this field experiment Napier and desho grasses were planted at the Aba Gerima and Guder watersheds, which represent midland and highland agro-ecologies, respectively using randomized complete block design with factorial arrangements in three replications. The treatments used were Napier or desho grass alone [control], Napier or desho grass with green leaf Desmodium, Napier or desho grass with FYM, and Napier or desho grass combined with green leaf Desmodium and FYM with a total of eight treatment combination. In the second field experiment, effects of FYM and enrichment planting with Napier and desho grass on natural pasture were evaluated at Aba Gerima watershed in terms of species composition, biomass yield, nutritional value, in vitro gas fermentation, and soil properties for two consecutive years. Natural pasture plots were treated with: Napier grass or desho grass, Napier or desho + FYM, Napier or desho + Desmodium uncinatum (Silver leaf Desmodium), and Napier or desho + FYM + Desmodium uncinatum; and untreated plots (natural pasture alone) were used as control with a total of nine treatments. The agronomic characteristics and laboratory data were subjected to two-way analysis of variance using SAS JMP-13. In the first experiment, the DMY and CPY were higher (p< 0.001) with FYM as well as FYM combined with green leaf Desmodium (9.1 to 9.6 t ha⁻¹ and 866.7 to 792.4 kg ha⁻¹) at Aba Gerima and (7.0 to 7.1 t ha⁻¹ and 795.3 to 510.5 kg ha⁻¹) at Guder, respectively. For Napier grass and desho grass there was an improvement in vitro organic matter digestibility (IVOMD) (6.7 vs 4.7%), metabolizable energy (ME) (5.5 vs 4.5%), and volatile fatty acids (VFA) production (23.1 vs 3.0%) in the green leaf Desmodium plus FYM treatments over the control at Aba Gerima. Moreover, the fertilizer treatments at cultivated land, i.e., Desmodium intortum plus FYM groups, showed soil organic carbon (18.4% and 20.5%) and available phosphorous (16.3% and 23.0%) content increments over the control in the same watershed. For the grazing land experiment, biomass yield in the desho + FYM + Silver leaf Desmodium plots (8.4 t ha xix −1 ) was higher (p< 0.001) than natural pasture with Napier grass (5.9 t ha −1 ), desho grass (6.5 t ha −1 ), and control (4.4 t ha ). In addition, grazing land plots treated with Napier + FYM, Napier + Silver leaf Desmodium, and desho + FYM + Desmodium showed soil organic carbon levels that were significantly higher than controls. The findings suggested that green leaf Desmodium plus FYM improves growth, yield, nutritional value, IVOMD, and VFA production by maintaining soil fertility in Ethiopia's Upper Blue Nile basin, facilitating their growth in cultivated land as alternative livestock feed for better production in these areas. Furthermore, desho + FYM + Silver leaf Desmodium produced the greatest improvement in grazing land biomass yield and IVOMD by maintaining soil fertility in the study area.