Despite the significance of woody species in terms of economic and environmental benefits in Ethiopia, there have been either fragmented, or modified or completely destroyed and changed into other land use system as a result of a long history of dense human settlements, and intense farming and grazing. The overall objective of this study is to assess the status of woody species diversity, regeneration and structure and their contribution to the inhabitant in Masha and Andracha district of Sheka zone in Southwestern Ethiopia. Systematic sampling and simple random sampling techniques were employed to conduct survey of households. Furthermore, vegetation data were collected in a total of 160 plots (20m x 20m) in four Peasant Associations (PAs) following gradient of accessibility (village to deep forest). The vegetation data analysis revealed that there were a total of 20 woody plant families were recorded in the four PAs. Where 27 species were found in sample plots in Modi PA, 29 species were found in all three PAs. The Shannon index-(H) of each PA woody vegetation were 3.0862 in Beto, 3.1373 in Abelo, 3.0662 in Chegecha and 2.9402 in modi. The density of woody species were 3681/ha in Beto, 3190/ha in Abelo, 3312/ha in Chegecha and 2886/ha in Modi. The mean comparison shows significance difference for tree size classes 50-60, 70-80 and 80-90 cm in Beto and Abelo PAs. Survey result reviled that the livelihood strategies in the study area mainly depend on woody species and their products. As a result the inhabitants in the study district retain woody species for their various uses. However, woody species with more products play important role on local livelihoods; hence conservation of woody species is essential to sustain their livelihoods.