A study was conducted in Tara Gedam and Abebaye forests 1,northwestern Ethiopia to investigate the diversity, regeneration status,socio-economic importance and the factors causing destruction of theforests. A total of 30 plots, measuring 20 m x20 m, were establishedalong line transects laid across the forests. Participatory Rural Appraisal(PRA) method was employed to generate the socio-economic data. Pri-mary data were collected by field observation, semi-structured interviewwith key informants and discussion with relevant stakeholders. A total of143 woody species belonging to 114 genera and 57 families were re-corded, and of all the species 44 (30.8%) were trees, 57 (39.9%)trees/shrubs, 33 (23.1%) shrubs and 9 (6.3%) lianas. The diversity andevenness of woody species in Tara Gedam forest are 2.98 and 0.65, re-spectively, and in Abebaye forest they are 1.31 and 0.31, respectively.The total density and basal area of woody species in Tara Gedam forestare 3001 individuals.ha·ha and 49.45 m, re-spectively. The results on the importance value index (IVI) and DBHclass distributions suggest that the species with low IVI value and poorregeneration status need to be prioritized for conservation. In thesocio-economic survey, the responses from the key informants indicatedthat the forests are the major sources of fuelwood (90%), constructionmaterial (80%), timber (75%) and farm implements (55%). The forestsare also sources of medicines, animal fodder, bee forage and edible fruits.Tara Gedam monastery, assisted by the local people who have strongreligious belief and high respect to the monastery, has played a great rolein the maintenance of the sacred forest since a long time. At present, theconservation efforts are made jointly by the monastery and institutionsconcerned with conservation. The major factors that cause destruction of the forests are livestock grazing, tree cutting for various purposes andfarmland expansion. The implications of the results are discussed, and the recommendations are suggested for conservation, management andsustainable utilization of the forest ecosystems.