There are only a few studies of land cover-land use changes which provide an integrated assessment of the biophysical and societal causes and consequences of environmental degradation in Ethiopia. Our objectives were to determine the status of the environmental degradation, analyse and evaluate the relationships among vegetation, geomorphological and socio-economic factors contributing to environmental degradation, and propose opportunities for rehabilitation of these natural resources. Field and other environmental data in northern Ethiopia and those acquired by remote sensing techniques were used to accomplish these objectives. These were integrated with socio-economic data obtained from official sources using a Geographic Information System (GIS). Spatial information such as the percent of land cover-land use types and geomorphological categories, and the percent of each land cover-land use type in the geomorphological categories were calculated using Geographic Information System (GIS). The three most dominant features of the geomorphological categories (93.0%) are scarps and denuded rock slopes, erosion surfaces and badlands, while the three most dominant features in the land cover-land use types (71.3%) are croplands, open woodlands and bushlands. Badlands account for 38.7% of the geomorphological units and 41.8% of the croplands currently occur on badlands. Simple and partial correlation analyses were applied to explore the extent of the interaction between the anthropogenic and the natural system. The anthropogenic system is influenced by elevation, which is positively correlated with human population and livestock densities and area of croplands. The natural system finds its place only on steep slopes as shown by the positive correlation between woodland, slope, high potential erosion, scarps and denudational rock slopes. The study indicates that agriculture in the study area is in a critical environmental situation. A change of paradigm in land-use and development is needed to encourage participation of the landowners and users in the efforts to conserve the vegetation and the soil. This study provides sound options that could be used to rehabilitate the vegetation directly and to alleviate the current pressure on the land and improve human welfare indirectly. Matching the human and livestock densities with the carrying capacity of the land through recruitment of the surplus labour force for a modern economy, resettlement, off-farm employment and intensification of agriculture are the long and short-term actions that may contribute to the rehabilitation of the degraded areas.