Water erosion is one of the indicator for climate change and key environmental problem in degraded watersheds. This study was conducted in Iresha watershed in Guraghe zone where there is high incidence of floods in the downstream and high upland degradation. In this study the retrospective and prospective state of soil erosion is assessed and local land management practices are examined and appropriate management interventions are proposed for the watershed. Soil loss was analyzed using RUSLE model with GIS and RS and management practices of the watershed is assessed using interviews of local farmers, NGOs and government workers. The result shows that Iresha watershed is experiencing soil erosion characterized by increasing over years in the watershed and cultivated lands generate more soil that is beyond the tolerable limit for the area with the same agro-ecological setup and also for Africa and global average. The maximum soil generating capacity is shifting upwards over years.