Forests in Ethiopian highlands have been degraded by diverse anthropogenic factors. In response to this, exclosures have been implemented widely as a vegetation restoration strategy for decades. However, studies that show the potential of exclosures in restoring degraded forests in the study area are scarce. Here, we evaluate the woody species diversity, structural attributes, and responses of functional traits in dry Afromontane forests of northern-eastern highlands of Ethiopia under varying forest exclosure ages. A systematic transect sampling method was employed to gather woody species data from four treatments, including open woodland (OWL), exclosure for ten years (EX10), twenty years (EX20), and thirty years (EX30). Within each treatment, we sampled from two slope orientations. Diversity, stand attributes and functional traits data were collected from 185 plots, each with a size of 20 m x 20 m, at all study sites. Smaller nested plots were established to account for seedlings and saplings. We used Generalized Linear Mixed-effect Models (GLMMs) to test variation in diversity metrics between slope orientations and forest exclosure ages. Non-metric multidimensional scaling (NMDS) and one-way permutational multivariate analysis of variance (PERMANOVA) were performed to visualize the difference in species composition among forest exclosure ages. Sixty-one woody species belonging to 34 families were identified from OWL, EX10, EX20 and EX30. Species richness (D-0) indicated a considerable increasing trend with increasing forest exclosure ages. Shannon diversity index (D-1) showed significant differences (p<0.001) among exclosure ages and slope orientations, while evenness and inverse Simpson (D-2) were only different within exclosure ages and slope orientations, respectively. EX30 had the highest Shannon diversity (D-1), while OWL had the lowest. The study found that species composition increased with forest exclosure ages, with higher species similarity observed between EX20 and EX30. Our results showed that exclosure treatment substantially (p<0.05) increased woody species density, basal area, seedling density, and sapling density. However, the variation in diameter at breast height (DBH) among exclosure ages was insignificant. According to the DBH distribution, an inverse-J shape pattern was found across all forest exclosure ages, indicating a healthy regeneration status. Juniperus procera and Dodonaea angustifolia had high importance values (IVI) in exclosure areas. Despite their insignificant variation, most functional traits showed an increasing trend with increasing exclosure ages. In general, the study highlights that exclosures can enhance ecosystem restoration in degraded landscapes and thus offers crucial insights for forest management in other areas by prioritizing biodiversity hotspots and threatened species.