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Harenna-forets, which is found in the Bale Mountains National Park, is the second largest moist tropical forest in Ethiopia. More than 12 million people rely on it for their livelihood. However, the current reality on the ground is not encouraging. The purpose of this study was to assess the extent and causes of deforestation in Dello-menna and Harenna-Bulluk woredas and to investigate its negative impact on the livelihood of the communities who live in and around the forests. The results of the study indicated that expansions of agricultural land, search for construction wood, illegal settlements, and search for fuel wood and illegal logging are some of the major causes of deforestation of the study area. As a consequence, according to the results of satellite image analysis, with in the period of 25 years (1986-2011) about 61,381.94 hectares of the Harenna forest has been cleared. And as a result, from 243,564.36 hectares of the Harenna forest cover in 1986 it has dropped to 182,182.42 hectares in 2011. The effects of deforestation on land productivity, agriculture and livestock production at large has a negative impact on livelihoods of the community members.