Understanding soil qualities related to land use and landscape positions is critical for designing long term soil management practices. The research was set out with the objective of analyzing the effect of land use and landscape positions on selected soil physicochemical properties in Dire watershed, central highland Ethiopia. Replicated 27 composite surface soil samples were collected across three landscape positions from three land use types (cultivated land, grazing land and forest land) and analyzed using standard protocols. Results showed that land use type, altitude and slope significantly affect important soil physicochemical properties. These include particle size distribution, bulk density (BD), electrical conductivity (EC), soil pH, available water content (AWC), permanent wilting point (PWP), field capacity, soil organic carbon (SOC), total Nitrogen (TN) and available phosphorus (AP). Analysis of variance results showed that significant (p < 0.05) effect of slope, land use, landscape position and their interaction on AP, SOM, SOC, PWP and AWC. Results of correlation analysis showed that SOC, and EC have a significant positive correlation with TN but, AP, TN, and clay content were negatively correlated with BD. Comparatively cultivated land recorded lower soil quality than forest and grazing lands.