This paper documents the events leading to the imminent collapse of an attempt to rehabilitate a degraded ecosystem in central Tanzania, focusing on the consequences of the failure to systematically monitor socio-economic and environmental indicators. A decision was taken in 1979 to evict all grazing livestock from a 1200 km2 semi-arid area, the so-called Kondoa Closed Area, in central Tanzania due to their destructive effect on contour ridges and bunds that had been constructed in an attempt to arrest land degradation. Although the closure was successful in that the vegetation quickly regenerated and soil erosion was arrested, the evictions resulted in severe hardship for the agro-pastoralists in the area. As a result, it was decided a decade later to allow the reintroduction of cattle on condition that they were totally confined and were of improved dairy breeds. Although performance and economic data have generally been positive, the top-down approach to the introduction of the cows, the lack of baseline data, followed by the withdrawal of external funding, have resulted in increased illegal free-grazing and the near collapse of the attempt to convert a degraded ecosystem to sustainable use. It is concluded that the probable collapse of the ecosystem in the Kondoa Closed Area is a result of the initial top-down approach to the introduction and implementation of the project, inadequate monitoring of socio-economic and environmental indicators, and ultimately to the withdrawal of donor funding.