This review highlights the major drivers and consequences of deforestation in Ethiopia and the forest conservation options. Ethiopia possesses diverse forest resources, which is attributed to its topographic, edaphic and climatic diversity. The forest resources have immense environmental and socio-economic values and thereby play a great role in the sustainable development of the country. However, the forest resources of Ethiopia are dwindling at an alarming rate due to natural and more importantly anthropogenic factors. The major drivers of deforestation and forest degradation are agricultural expansion, overexploitation, urbanization, fire incidence, exotic species and villagization/resettlement, which are all driven by human population growth. There are a number of challenges/problems/ constraints that are limiting the effectiveness of conservation and management of forest resources. Deforestation has led to soil erosion and decline in soil fertility, loss of or decline in biodiversity, shortage of wood and non-wood forest products, reduction in agricultural production and productivity, recurrent drought and famine, flooding, scarcity of water, loss or degradation of wetlands, siltation of water bodies, desertification, climate change, and poverty. Therefore, greater and concerted efforts are needed to reduce deforestation and environmental degradation and thereby ensure environmental stability and human wellbeing in Ethiopia.