Ethiopia is among the poorest countries in which poverty, land and resource degradation appear to feed off each other. The irony is that Ethiopia is a country with high biodiversity and distinctive ecosystems and the natural resource base is critical to the economy and the livelihood of a high percentage of the population. Being the owner of varying agro ecology, the country’s agricultural production system had practiced for decades with a maximum potential. However, because of the presence of interrelated problems, the productivity had not sustained as its potential. From the interrelated problems, land degradation takes the first and challengeable problem in many countries. Land degradation refers to a temporary or permanent decline in the productive capacity of the land, or its potential for environmental management as a result; the long-term biological and environmental potential of the land has been compromised. Land degradation in the Ethiopian highlands (i.e. areas above 1500 m.a.s.l.) has been a concern for many years and is a great threat for the future that requires great effort and resources to ameliorate. It had adverse effect on lowering of livestock production by shrinking grazing land, the fertile soil types were washed and the grazing land was dominantly covered by unpalatable pastures and grasses which had low nutritive value and fertility for crop-livestock production system. In other cases, degradation induces farmers to convert land to lower-value uses; for instance, cropland converted to grazing land, or grazing lands converted to shrubs or forests. Equitable and secure access to land is a critical factor for the rural poor, especially livestock owners, who depend on agriculture and animal-related activities for their livelihood. Having secure access to land for agriculture and pastoral activities reduces their vulnerability and enhances their opportunities to invest in land for agriculture and livestock activities. Historical patterns of feudal ownership of land followed by government ownership and despite policy change uncertain status of land ownership. These land distribution and ownership patterns coupled with continuous fragmentations and degradation disrupt the balance between crop, livestock, and forest production. These things nowadays enforce Ethiopian farmers to put more land into crop production than working on livestock sector. Livelihoods are complex, dependent on animal and crop production based on land and water resources, with emerging market opportunities. And from year to year, the size of farms is getting minimized because of land degradation and segmentations, and these make a change in farm size dynamics and farming shift. Currently, there is a great scenario towards the land policy pattern and agricultural production system, which is the backbone of the country’s economy. Therefore, the aim of this paper is to review the effect of land degradation on farm size dynamics and crop-livestock production since the impact of these things is not well measured.