In the face of degradations of natural resources and lack of alternative options, there arernpotentials of ecotourism in and around Abijata Shala Lake National Park (ASLNP) whichrndegraded by anthropogenic activities .The major objective of this study was assessing thesernpotentials of ecotourism or alternative options for sustainable use of natural resourcesrnwhich will improve the livelihood of local communities and conservation of ASLNP.rnSurvey questionnaires and literature reviews were employed to collect primary andrnsecondary data and to assess the socio-economic situation of the households, ecotourismrnresources, and the related problems of natural resource managements to come up withrnsolutions. Five peasant associations were selected using purposive sampling from 18rnpeasant associations in and around ASLNP. Thereafter, 168 households were selected fromrn1334 targeted populations (households) of five peasant associations by systematic samplingrn(i.e., from a list in a certain order in which every eighth household was chosen). Surveyrnquestionnaires were employed to collect information from households of local people, fourrnhotels or lodges, tourists, ASLNP and other related stakeholders like Oromia Bureau ofrnAgriculture and Rural Development and Cultural and Tourism offices at differentrnadministration levels. The respondents of different stakeholders except households of localrnpeople and tourists have been selected by purposive sampling in order to get relatedrninformation to the research. About 58 respondents of tourists were selected by randomrnsampling from 290-targeted tourists of those visiting ASLNP in September 2007. Thernanalyses of the study revealed that natural and cultural resources such as abundance andrndiversity of bird, scenic landscape, ostrich farm, hot springs, cultural and historicalrnattractions and some hotels or lodges at nearby areas are the main ecotourism potential inrnASLNP. Deforestation, expansion of farming, overgrazing and over extraction of waterrncoupled with conflicts between park and local communities are detected as the majorrnproblem contributors to the degradations of natural resources of the area. The study alsornrevealed some income generating alternatives or ecotourism potentials which could helprnto reduce the present degradations of natural resources of the park. About 37.2% ofrnsampled households expressed their interests for diversified livelihood or ecotourismrnxrnactivities. Offering tourist facilities and services and creating job opportunities forrnmembers of local communities are the positive impacts of the tourism activities whereasrncutting trees, occurrences of seasonality and leakages are the negative impacts. Thernnegative impacts might be able to aggravate poverty and consequent deterioration ofrntourism resources/natural resources. Finally, reinforcing existing off-agriculturalrnlivelihoods, introducing additional alternative options or ecotourism are important strategicrndirections for sustainable management of natural resources for ASLNP and relatedrnprotected areas.rnKey word: Ecotourism, leakage, Park, Poverty alleviation, and Tourism