Land degradation, which includes degradation of vegetation cover, soil degradation and nutrient depletion, is a major ecological problem generally in Ethiopia and particularly in the study area. As a response of the ever expanding land degradation, rehabilitation of degraded lands through enclosure of areas has been practiced in the study area. Despite these efforts, there are no studies in the area, which would provide information on impact of enclosed areas to consider as one strategy to help prevent decline of soil degradation, improve soil quality and thereby increase agricultural productivity. The enclosure which was seven year old, and has a total area of 20 hectares was compared with adjacent free grazing land in similar landscape position. This study focuses on the impact of area enclosure establishment on soil quality, and assesses local farmersâ€™ perceptions on the enclosure and benefits gained from it. The socioeconomic survey was carried out on the basis of a semi-structured questionnaire survey and focus group discussion. Farmers around the enclosure area were randomly selected for the interview. The impact of area enclosure on soil quality was assessed using soil physicochemical parameters such as soil organic matter, cation exchange capacity, total nitrogen, available potassium, available phosphorous, pH, electrical conductivity, texture and bulk density. Twelve soil samples were taken randomly from the two sites (6 from each), and analyzed. Soil laboratory analysis result revealed that the enclosure had significantly (p