Human settlements and swift expansion of agriculture have simplified the natural ecosystems and causing the loss of copious biological diversity. The current study was conducted in Bita district, southwestern Ethiopia to examine the pattern of land use/land cover (LULC) dynamics using multispectral satellite data for the years 1973, 1986, 2000 and 2018. The remote-sensed data were processed using ERDAS imagine 2014, ArcGIS map 10.5, and ENVI software. A supervised maximum likelihood classification algorithm was employed along with the visual interpretation of satellite images to classify each Landsat image into LULC categories. Semi-structured interviews and Focus Group Discussions were employed to identify major driving forces, impacts, and periodic LULC changes. The result revealed an alarming decrease in forestland but with an increase in the cropland. During the study periods, cropland, bareland and settlement areas have augmented by over 450% each. Conversely, grasslands and forestlands have reduced by over 45% each. The local communities perceived the population growth, and the expansion of coffee plantations and other croplands as the dominant drivers of LULC changes. The respondents also observed that the decline in forest cover triggered the loss of biodiversity, soil fertility and water availability. Decision-making on issues related to natural resource conservation, utilization and participatory resource management has to involve the engagement of the local community and other stakeholders. The deterioration in ecosystem services such as lack of benefits from medicinal plants from the forest, increase land degradation, and the decrease in water availability found to be the impacts of LULC change. This calls for a proper natural resource management plan and improvement in the livelihood of the community in the study area.