LULC changes are caused by natural and human alterations of the landscape that could largely affect forest biodiversity and the environment. The aim of the study was to analyzed LULC change dynamics in the western escarpment of the rift valley of the Gamo Zone, Southern Ethiopia. Digital satellite images downloaded from USGS were analyzed using ERDAS Imagine (14) and Arc GIS 10.2 software and supervised image classification was used to generate LULC classification, accuracy assessment and Normalized Difference Vegetation Index (NDVI). Drivers of LULC change were identified and analyzed. Four land classes were identified such as forest, farmland, settlement and water-wetland. Settlement and farmlands have increased by 7.83% and 5.88%, respectively. On the other hand, both forest and water bodies and wetland decreased by aerial coverage of 11.03% and 2.68%, respectively. The overall accuracy of the study area was 92.86%, 94.22% and 94.3% with a kappa value of 0.902, 0.92 and 0.922, respectively. NDVI values ranged between -0.42 to 0.73. Agricultural expansion (31.4%), expansion of settlement (25.7%) and Fuelwood collection and Charcoal production (22.9%) were the main driving forces that jeopardize forest biodiversity of the study area. Integrated land use and policy to protect biodiversity loss, forest degradation and climate changes are deemed necessary.