An approach to derive relationships for defining land degradation and desertification risk and developing appropriate tools for assessing the effectiveness of the various land management practices using indicators is presented in the present paper. In order to investigate which indicators are most effective in assessing the level of desertification risk, a total of 70 candidate indicators was selected providing information for the biophysical environment, socio-economic conditions, and land management characteristics. The indicators were defined in 1,672 field sites located in 17 study areas in the Mediterranean region, Eastern Europe, Latin America, Africa, and Asia. Based on an existing geo-referenced database, classes were designated for each indicator and a sensitivity score to desertification was assigned to each class based on existing research. The obtained data were analyzed for the various processes of land degradation at farm level. The derived methodology was assessed using independent indicators, such as the measured soil erosion rate, and the organic matter content of the soil. Based on regression analyses, the collected indicator set can be reduced to a number of effective indicators ranging from 8 to 17 in the various processes of land degradation. Among the most important indicators identified as affecting land degradation and desertification risk were rain seasonality, slope gradient, plant cover, rate of land abandonment, land-use intensity, and the level of policy implementation.