Wetland ecosystems are one of the most important areas that provides different ecosystems services as well as habitat for plant and animal species. In spite of multipurpose, wetland ecosystems are under threats. This study attempts to analyze wetland dynamics of Abay Choman and Jimma Geneti watershed in Horo Guduru Wollega Zone, Western Ethiopia using geospatial techniques. The land use land cover (LULC), the Normalized Difference Vegetation Index (NDVI), and Normalized Difference Water Index (NDWI) were investigated using Landsat 5 TM of 1991, Landsat 7ETM+ of 2003, and OLI/TIRS of 2021. In the present study, the LULC was classified using a supervised classification method with maximum likelihood algorithm. The red and infrared bands of Landsat imagery from three different time periods were used to calculate NDVI, while the NDWI was estimated using the green and near infrared (NIR) bands of multispectral Landsat images. Results show that wetland ecosystem in the study area decreased by about 125.2 km2 (8.8%) with the rate of 4.2 km2/year. In contrast, agricultural land increased by 223.4 km2 with the rate of 7.4 km2/year between 1991 and 2021. About 66.7 km2 wetland was converted to cultivated land whereas 29.3 and 24.7 km2 of grassland and shrubs land were converted into cultivated land. As a result, the maximum NDVI and NDWI values were decreased between 1991 and 2021. To minimize the rapid loss of wetland and water bodies in the study area, proper land use planning and environmental education should be promoted.