The large variation in climate, geology and land forms in Ethiopia has led to a great variety of ecosystems with high plant species diversity. We sought to provide a comprehensive documentation on forest based medicinal plants, indigenous knowledge, and conservation challenges in degraded dry afromontane forest in northern Ethiopia. Ethnobotanical data were collected using semi-structured interviews (n = 272) and focus group discussions (n = 26) with key informants. Frequencies were calculated and cross tabulated to see the medicinal value of plants found and effect of demographic characteristics on medicinal plants use. Thirty-four medicinal wild plants species belonging to 33 genera and 26 families used as cure for 35 human and livestock ailments were documented. Shrubs were dominantly used (48.8%), followed by trees (25.6%), and herbs (16.3%). The largest number of remedies (29%) was used to treat gastro-intestinal disorders followed by joint pain (25.8%). The administration routes for human medicines were oral (42%), traditional smoke bath (36%), dermal (7%), nasal (5%) and auricular (2%); while oral (32%), dermal (25%) and tie (27%) were for veterinary medicines. Leaves (33%), roots (22%) and stem (16%) were commonly used plant parts for herbal preparation. The author’s suggest encouraging in situ conservation of the existing medicinal plants. As a result of heavy exploitation, many forest associated medicinal plants in the area, like Laggera tomentosa, Phytolacca dodecandra, Verbena officinalis, and Zehneria scabra are becoming rare and difficult to find. The authors suggest domestication of some of the wild medicinal plants by households or using by communal lands for long term conservation of the species and continued availability for the use by local communities.