Wetlands are valuable resources that provide a variety of functions for local populations, including environmental, hydrological, and socioeconomic benefits. Despite the importance of wetlands to humanity, they have been largely degraded and even lost in many countries including Ethiopia because they are wrongly regarded as wastelands. Some wetland conservation policies were designed not based on the perceptions of the people residing around the wetlands and lack of attention to communal areas. It is because of this gap that a quantitative analysis of physicochemical soil quality analysis and the local community’s perceptions was carried out with the overall goal of analyzing the degradation status of Kadar-Basaso wetland and community perceptions. A cross-sectional research approach was used with a purposeful soil sampling from/in 6 plots sized 50 m × 50 m and >100 m apart along two transect lines, and 200 household heads chosen randomly from three villages(Basaso, Shallo, and Nano Robe) bordering the wetland. Soil sampling, questionnaires, focus group discussion, and key informant interviews were used to collect data and then examined quantitatively and qualitatively. The result shows that the Kadar-Basaso wetland was moderately degraded. The physicochemical analysis of the soil reveals that the pH was acidic, indicating the presence of acidic waste effluents. In addition, the electric conductivity was salt-free, cation exchange capacity were found to be low, the organic matter was relatively low, potassium levels vary very little, and Phosphorous variation was minimal. Expansion of farmland and Overgrazing were the most damaging elements affecting wetland biodiversity. From the analysis, it was noted that communities’ attitudes influence human activities on the wetland. The study recommends that the government and wetland management authorities must establish strategies to minimize deterioration in the area and offer better infrastructure for both livestock keepers and farmers to improve the long-term usage of wetlands. The best management strategies should be devised for all sizes, types, and all site wetlands.