In Ethiopia, plantation forestry for soil conservation and wood supply is mainly based on exotic tree species harvested at 12–25-y rotation age. To evaluate if these forests truly represent ecological rehabilitation of degraded areas through the build-up of soil organic matter before harvest, relative abundances of C3 vs. C4 carbon in soils under a 25-y-old forest on Mt. Yegof have been studied based on changes in soil δ13C values due to vegetation cover changes by afforestation. At Yegof, shrub and tree leaves had δ13C value of −28.7 ± 0.4‰. The grasses showed a value of −30.7 ± 0.6‰ at 2700–3000 m asl (typical C3) and of −13.6 ± 0.3‰ at 2520 m asl (typical C4). Soil δ13C values were −21.7 ± 0.9‰ in soil at 0–5 cm and −20.7 ± 0.6‰ in soil at 30–50 cm indicating a long history of C4-dominated grass or cropland over the elevations sampled. The shifts towards lower δ13C values in soil at 0–5 cm coincide with 25 y of C3 vegetation. Carbon content in topsoil was 3.4–9.2% and in tree leaves was 45–56%. However, an estimate of new C3 carbon (54%) in 0–5 cm soil was low as compared with tropical rain-forest and savanna ecosystems suggesting a slow rate of carbon turnover at Yegof. The results suggest that degraded sites at Yegof may need further duration of forest cover longer than current rotation times of the forests to improve soil conditions and restore soil organic matter and carbon, which have been lost during the past land use. It is encouraging from the perspectives of ecological rehabilitation and soil conservation that a shift in the dominance from C4 vegetation types of agricultural and grassland ecosystems to C3 forest ecosystems could be established in less than 25 y on these highly degraded slopes of Mt. Yegof.