In developing countries including Ethiopia, human needs for watershed resources are increasing from time to time. On the other hand the existing watershed resource goes down and unable to meet the demand of the urban as well as the rural communities. Due to this fact, Watershed development has been considered as one of the strategies to create a healthy environment and improve livelihood, and efforts have been made in different parts of the country Ethiopia. However, the effort aimed at improving rural livelihood through managing watershed resources chased failure to understand farmer’s attitude and participation. Therefore this study tries to identify people’s attitude, level of participation in watershed development activity and analyze the relationship in Karasodity watershed, Southern Ethiopia. Combinations of methods were used to achieve the stipulated objective. Different PRA tools/techniques were employed in addition to formal questionnaire survey. The attitude scale was administered on the sample farmers (N=313) who were asked to express their reaction in terms of their agreement or disagreement with each item developed and standardized by selecting any one of five response categories strongly agree, agree, undecided, disagree and strongly disagree. In the study watershed farmers’, experts of different background from Agricultural and Rural Development Office, and watershed implementing committees were involved in the project management. With increasing funds allocated to watershed development, non government organization (i.e. Sefte-net) aggressively participated in implementing this program in the area, and demonstrated the importance of farmer’s involvement in the success of watershed development. The present inspection reveals that on an average 84% of the respondents participated at the planning stage. A very high proportion of respondents contributed in the form of labour, followed by participation in the form of both labour and money. The study result also revealed that the majority of respondents (89%) had partial awareness where as a very low proportion (1.59%) is having complete level of awareness. Fair level awareness was observed for agroforestry, mixed cropping and intercropping. Thus, it may be concluded that majority of respondents are having positive attitude towards the watershed development programme. Establishing learning capacity in local communities may be particularly important to achieve sustainable participatory watershed management because of the importance of local institutions and collective action in the watershed environment. The research or learning process can be a way to united diverse stakeholders around common interests and goals.