For several decades, integrated and sustainable watershed management has been suggested and tried in several countries in the world, as an effective way to address complex water and land resource challenges. However, its implementation has not been successful in most cases, due to various barriers. In Ethiopia, this approach is new and requires appropriate strategies to overcome the barriers and practice effective integrated and sustainable watershed development. This research therefore examines watershed development intervention in GaraMoye and its impact on the socio-economic development and environmental wellbeing. The study has given prime focus on exploring the prospects, approaches and barriers to integrated and sustainable watershed development of GaraMoye micro- watersheds, by examining the existing complex set of biophysical and socio economic conditions, stakeholders‟ attitudes and perceptions, arrangements for participation of communities, available institutional structures and recent policy of land certification. In addition, a land use land cover change analysis was carried out to see the trends in land use change. For the socioeconomic study data was gathered from official documents, direct observations, using semi-structured interviews with key informants, and Focus group discussion with watershed committees and households of the three kebeles in GaraMoye micro watershed development. The result indicated that effective and sustainable watershed management can be effectively realized when the watershed community participate from the beginning, by changing ownership of communal lands into private or association holdings, integration of multidisciplinary team, by enabling the local community to generate income within the short run from on farm and off farm activities, and when there is active, community watershed management institution supported by legislation. To evaluate watersheds development and management strategy the study applied supervised classification-maximum likelihood algorithm in ERDAS imagine to detect land cover/land use changes observed in Gara Moye watershed, using the image of land sat obtained from 2002,2012 and2016. The land use land cover classification of the study area was classified into five classes such as cultivated land, Grazing /Grass land, water body, settlement and Forest lands by using unsupervised and supervised classification by RS software. The land use land cover change matrix between 2012 and 2016 showed that during the indicated period there was much more significant land use land cover change. About area of grass land was 415.395 ha, 136.732ha, 343.553 ha and 6.120ha converted to cultivated, settlement and Waterbody. Forest cover, grazing land, water body, were converted into cultivated and settlement area respectively. Hence, proper management of the watershed is required or else these resources will soon be lost and no longer be able to play their role in the socioeconomic development of the area. Key Words: - Watershed management, land use land cover change, Land management’s activities, Integrated land use plan sustainable use of land resources