Land degradation in the form of soil erosion and nutrient depletion is a major constraint to agricultural production in the highlands of Ethiopia. Over the last four decades, the government of Ethiopia and a consortium of donors have been promoting different land management (LM) practices to halt land degradation. However, the adoption rate of these practices has been minimal. This is because investments in LM practices are influenced by various institutional, socio-economic and bio-physical factors. The main objective of this research is to investigate the impact of these different factors on investments in LM in the north-western Ethiopian highlands. It gives in particular emphasis on the drivers of the different stages of adoption, on profitability of LM practices, and on land quality, land fragmentation, tenure arrangements and social capital. The findings of this research indicate that final adoption depends mostly on profitability, land related factors, social capital and personal preferences. For enhancing the adoption and impacts of land management, there is a need to increase knowledge about location specific viable LM practices, to promote collective action at watershed level, to pay more attention to farmers’ preferences and to improve the capacity and capability of farmers.