In the Ethiopian Central Highlands, a serious soil degradation occurs while fuelwood demand is high. This study consists of an evaluation of seven tree species for fuelwood and soil restoration under three soil management options: control, manure and manure + mulch, in degraded highlands of Ethiopia. The experimental design was a split-plot, species as the main plot and treatment as subplot, with three replicates. Survival count, height and root collar diameter growth measurements were measured annually until 48 months. Biomass production for fuelwood was inferred at the end of the experiment. Before and after the experiment, soil parameters (pH, organic carbon, N, P, K and cation exchange capacity) were measured to test changes in soil condition because of species plantation. A mixed model and repeated analysis of variance was performed. Grevillea robusta A. Cunn. ex R. Br. showed maximum survival (100%), followed by H. abyssinica (Bruce) J.F.Gmel. (93·52%); while the lowest survival rate was recorded for A. decurrens Willd. (57·41%). Hagenia abyssinica (Bruce) J.F.Gmel. and Chamaecytisus palmensis (Christ.) Hutch showed the lowest growth rates but both species showed the highest soil condition improvement. E. globulus Labill. and Acacia species presented the highest growth rates and biomass although Eucalyptus depleted soil nitrogen. Hagenia abyssinica (Bruce) J. F.Gmel. is recommended for soil rehabilitation, whereas Grevillea robusta A. Cunn. ex R. Br. can be used for simultaneous fuelwood production and soil rehabilitation. An ecological based study on E. globulus’ Labill. effects in Central Highlands is recommended before recommendation for large scale fuelwood plantations. Copyright © 2014 John Wiley & Sons, Ltd.