We studied the diversity, community composition and natural regeneration of woody species in an isolated but relatively large (> 1,000 ha) dry Afromontane forest in northern Ethiopia to assess its importance for regional forest biodiversity conservation. The principal human-induced disturbance regimes affecting this forest include logging and livestock grazing. Vegetation data were collected in 65 plots (50 m × 50 m); seedling species composition and density were determined in 10 m × 10 m nested plots. We used a cluster analysis to identify plant communities and non-metric multidimensional scaling (NMDS) ordination to investigate environmental factors that influenced the distribution of the emergent plant communities. Three plant communities were identified: a Juniperus procera-Maytenus senegalensis community, which represented a phase of the potential natural dry Afromontane forest vegetation on steep slopes with shallow soils, a Pterolobium stellatum-Celtis africana community, found on more mesic sites, and a Cadia purpurea-Opuntia ficus-indica community, typically representing severely disturbed habitats. Altitude, slope, soil depth and distance to the nearest stream, which we collectively interpreted as a moisture gradient, and forest disturbance separated the plant communities. With only 39 of the 79 recorded woody species present in the seedling layer, the forest currently faces an extinction debt of 50 per cent of the total woody species pool. Human disturbance has clearly affected plant species diversity in this forest as degraded plant communities typically lacked the commercially interesting or otherwise valuable tree species, were encroached by shrubs and in areas severely invaded by alien species. Further disturbance will most likely result in additional declines in biodiversity through local extinction of indigenous tree species. Despite the problems associated with conserving plant species diversity in small and isolated populations, this relic forest is of particular importance for regional conservation of forest biodiversity, as species with high conservation value, such as Afrocarpus falcatus, Allophylus abyssinicus and Bersama abyssinica, are still present as mature trees, and as other forest fragments in the region are two orders of magnitude smaller, and therefore more heavily impacted by small population sizes and unfavourable edge effects. Forest management should focus on avoiding further degradation, increasing natural regeneration and improving stakeholder participation. © 2016, Institute of Botany, Academy of Sciences of the Czech Republic.