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Participatory forest management (PFM) and area exclosure (AE) are two major degraded forests and agricultural landscapes rehabilitation mechanisms in Ethiopia. This study examined shared strengths and limitations of PFM and AE. The major strength of PFM is that the process begins by convincing communities to establish access and management norms in defined areas within natural forests that are traditionally under de facto open access regimes. In establishing AE, communities are engaged and encouraged to identify, demarcate and socially fence degraded communal lands to ensure proper conservation in accordance with agreed bylaws. However, both PFM and AE also exhibit some common problems: unclear ownership and use rights, low levels of community participation, poor productivity and weak institutions undermine positive gains and sustainability of the two state-led FLR mechanisms in Ethiopia. This research identified measures that would potentially improve the outcomes of PFM and AE in rehabilitating degraded forests and lands in Ethiopia.