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The headwaters of the Blue Nile River in Ethiopia contain fragile mountain ecosystems and are highly susceptible to land degradation that impacts water quality and flow dynamics in a major transboundary river system. This study evaluates the status of land use/cover (LULC) change and key drivers of change over the past 31 years through a combination of satellite remote sensing and surveying of the local understanding of LULC patterns and drivers. Seven major LULC types (forest land, plantation forest, grazing land, agriculture land, bush and shrub land, bare land, and water bodies) from Landsat images of 1986, 1994, 2007, and 2017 were mapped. Agriculture and plantation forest land use/cover types increased by 21.4% and 368.8%, respectively, while other land use/cover types showed a decreasing trend: water body by 50.0%, bare land by 7.9%, grassland by 41.7%, forest by 28.9%, and bush and shrubland by 38.4%. Overall, 34.6% of the landscape experienced at least one LULC transition over the past 31 years, with 15.3% representing the net change and 19.3% representing the swap change. The percentage change in plantation forest land increased with an increasing altitude and slope gradient during the study period. The mapped LULC changes are consistent with the pressures reported by local residents. They are also consistent with root causes that include population growth, land tenure and common property rights, persistent poverty, weak enforcement of rules and low levels of extension services, a lack of public awareness, and poor infrastructure. Hence, the drivers for LULC should be controlled, and sustainable resources use is required; otherwise, these resources will soon be lost and will no longer be able to play their role in socioeconomic development and environmental sustainability.