Area enclosure is emerging as one of the strategies to rehabilitate and restore degradedrnenvironments. In this study the roles of area enclosure investigated in comparison to an openrnadjacent site were assessed for vegetation, soil quality and local livelihoods in one of the highlyrndegraded areas of the Southern wello, Kallu woreda. The main purpose of the stud was tornanalyze changes in plant diversity, density, soil fertility improvement as well as some of thernbenefits to local community as a result of area enclosure. Comparative assessment result of thernvegetation analysis showed that the density of woody species in the enclosure and open site werern5563 and 3862 individuals per hectare, respectively. A total of fifty woody species, representingrn27 families were recorded in the study site. Out of the fifty species, 47 were recorded in thernenclosure while 37 were in the open site. A total of 13 species were recorded in the enclosure,rnwhich were absent in the open site. Similarly 3 species were recorded in the open site, whichrnwere not present in the enclosure. Diversity and density comparison of vegetation is found to bernsignificantly better in the enclosure than in the open site. The soil variable results also revealedrnthat soil organic matter, CECs, exchangeable Ca, soil moisture were significantly improved as arnresult of the enclosure. Apart from the biodiversity and soil quality improvement, localrncommunity has benefited from the enclosure in the form of forage for livestock by cut-and-carryrnsystem and farmland protection from clotting with silt and mud from the upper catchments. Thisrnhas developed a positive attitude by the local community towards enclosure development. Thisrnstudy generally shows that area enclosure is a promising strategy to rehabilitate degradedrnenvironments as it is fast, cheap and lenient. However, local community is complaining about thernmanagement system, access to resources and benefits. Hence, area enclosure establishmentrnshould be done in consultation with local communities from the inception through out itsrndevelopment for sustainability.rnKey words: Area enclosure; Livelihoods; Soil quality; Southern Wello (Kallu); Diversity; Woodyrnspecies; Cut-and-carry.