Wetlands worldwide and in Ethiopia have long been subject to severe degradation due to anthropogenic factors. This study was aimed at analyzing the impact of land use/cover dynamics on Lake Abaya-Chamo wetland in 1990–2019. Data were acquired via Landsat TM of 1990, ETM + of 2000, and OLI of 2010 and 2019 images plus using interview. Unsupervised and supervised classifications (via ERDAS14 and ArcGIS10.5) were applied to detect land use/cover classes. Normalized difference vegetation index, normalized difference water index, change matrix model and Kappa coefficients were used for analysis of the land use/cover dynamics in the lake-wetland. It was found that forest; water, shrub land, agricultural land, settlement and swamp area were the main land use/cover classes. While ‘settlement’ and ‘water body’ of the lake-wetland increased at progressively increasing magnitudes of changes in three periods within 1990–2019, ‘shrub land’ and ‘swamp’ declined at progressively increasing magnitudes of loss in the same periods. The NDWI result revealed that ‘swamp’ area shrank by 48.9% (2,991 ha) due to siltation-led expansion of the lake-water in three decades. Siltation, rapid population growth-led expansion of settlement and irrigation-based farming were the main drivers of the land use/cover dynamics and degradation of the lake-wetland. Thus, consistent mapping and integrated actions should be taken to curb the threats on the sustainability of the lake-wetland in Southern Ethiopia.