Eucalyptus is one of the exotic tree species in Ethiopia. It has been also associated with the Ethiopian environment and economy. It is one of the most successful trees in which it adapts to a variety of environments and its fast growth property. Eucalyptus is often considered to have undesirable ecological qualities such as depletion of soil water and nutrients, aggressive competition for resources with native flora, unsuitability for erosion control, production of allelopathic chemicals or phytotoxic compounds such asphenolic acid, tannins and flavonoids that suppress the growth of other plants and provision of in adequate food, habitat for wild life, and even recreational aesthetics are some of the controversies. People in Ethiopia have accumulated important local knowledge of its management and expansion because of its greatly increased benefits such as fuel wood, construction building and financial benefits. It is useful for provision of wood and other products thereby reducing the pressure on the natural forests, conservation of soil and water, rehabilitation of degraded lands, fostering the regeneration of native woody species, provision of food and habitat for wildlife, drainage of swampy areas, mitigation of climate change and provision of amenity. The benefits of Eucalyptus are far greater than the negative impacts. The negative impacts are mainly because of the poor management rather than its biological characteristics.