Abstract: This study was aimed to evaluate impact of wood harvesting for fuel and its ultimate effect on the sustainability of the forest resources in the study area in the year 2004. To estimate on level of wood fuel consumption, data was collected from stratified and randomly interviewed urban and rural households and non-household sectors using semi-structured survey questionnaire. Harvesting for fuel wood was estimated at established check points and measuring on the amount of inflow to the town. Forest inventory was also executed to estimate on the amount of growing stock and its incremental yields by land use types. The finding revealed as the actual harvest for fuel was 3 times the annual allowable yield from the forest and trees outside forest for fuel. Harvesting above allowable annual cut degrade the forest ecosystem quality which imply local forest product crises, loss of biological diversity and contribute to expand desertification globally. Therefore, efforts need be done to reduce harvesting below annual incremental yields since in this case it is assumed that the standing stock remains untouched and the wood fuel supply is sustainable.