The potential role of exotic tree plantations in facilitating successional processes on degraded areas was evaluated in southern Ethiopia by comparing seedling characteristics, transpiration and photo-synthetic performance of Podocarpus falcatus seedlings in Eucalyptus plantation, Pinus plantation, adjacent natural forest and clear-felled plantation site. P. falcatus seedlings exhibited differences in architecture between Eucalyptus and Pinus plantations. They had higher leaf area, shorter internode length and greater number of lateral branches in Eucalyptus plantation. At similar vapor pressure deficit (VPD), P. falcatus transpired much less than E. saligna, especially at higher VPDs. Analysis of fluorescence parameters in the leaves showed no significant differences in the level of dark-adapted and light-adapted fluorescence yield (Fv /Fm and ΔF/Fm, respectively), electron transport rate (ETR) and nonphotochemical quenching (NPQ) among seedlings grown inside plantations and adjacent natural forest, indicating similar photosynthetic performance. Nevertheless, there was evidence of photoinhibition in P. falcatus in the clear-felled site which had low fluorescence yield but high values of NPQ as protection from photoamage. The light response curves of ETR, NPQ and ΔF/F m , showed similar light saturation behavior among the seedlings grown inside plantations and natural forest and suggested a sequence of light-adapted to shade-adapted behavior in Natural forest > Eucalyptus plantation > Pinus plantation. The results show the structural flexibility, better water-use and adaptability of P. falcatus in its use of the understory environment of plantation species. The potential role of exotic tree plantations in Facilitation of processes in degraded areas was evaluated in southern Ethiopia by comparing seedling characteristics, transpiration and photo-synthetic performance of Podocarpus falcatus seedlings in Eucalyptus plantation, Pinus plantation, adjacent natural forest and clear-felled plantation site P. falcatus seedlings exhibit differences in architecture between Eucalyptus and Pinus plantations. They had higher leaf area, shorter internode length and greater number of lateral branches in Eucalyptus plantation. At similar vapor pressure deficit (VPD), P. falcatus transpired much less than E. saligna, especially at higher VPDs. Analysis of fluorescence parameters in the leaves showed no significant differences in the level of dark-adapted and light-adapted fluorescence yield (Fv / Fm and ΔF / Fm, respectively), electron transport rate (ETR ) and nonphotochemical quenching (NPQ) among seedlings grown inside plantations and adjacent Nevertheless, there was evidence of photohibition in P. falcatus in the clear-felled site which had low fluorescence yield but high values ​​of NPQ as protection from photoamage. The light response curves of ETR, NPQ and ΔF / F m, showed similar light saturation behavior among the seedlings grown inside plantsations and natural forest and suggested a sequence of light-adapted to shade-adapted behavior in natural forest> Eucalyptus plantation> Pinus plantation. The results show the structural flexibility, better water -use and adaptability of P. falcatus in its use of the understory environment of plantation species.