Background: Ethiopia is one of the world’s largest charcoal-producing countries. Charcoal remains the primary source of fuel for urban areas across the nation. Despite its affordability and accessibility, charcoal production has far-reaching social and environmental consequences. These include health risks for producers, air pollution, greenhouse gas emissions, local forest depletion, and social issues related to migration, labor, and gender dynamics. Raising awareness among charcoal producers and users about the environmental impacts of charcoal production and consumption, particularly forest cover loss and health impacts, could help reduce production and consumption, thereby conserving forests and protecting the environment. This study aimed to characterize charcoal production and assess producers’ awareness of its social and environmental impacts in the Gozamin District. Methods: A mixed-methods research design was employed. Three kebeles were purposively selected, and households engaged in charcoal production were included in the study. A total of 98 samples were randomly selected from these kebeles of Gozamin District. Data was collected through structured questionnaire surveys and analyzed using Microsoft Excel and SPSS (Version 20). Descriptive statistics were generated from the analysis. Results: The study reveals that charcoal production in the Gozamin district has significant social impacts, with health and safety risks being the most critical concern. Deforestation and loss of natural vegetation were identified as the most significant environmental impacts of charcoal production, cited by 41.8% of respondents. The study found that 58.2% of local community members supported charcoal production, suggesting a majority perceive it positively, likely due to its economic or energy benefits only 10.2% of respondents reported a high level of cooperation among stakeholders. The study found that reforestation and tree planting programs were the most frequently implemented mitigation measures, cited by 54 respondents (55.1% of valid responses). The predictors (soil erosion, gender, deforestation, health, and air pollution) collectively demonstrated a moderate level of explanatory power regarding charcoal production. Conclusion: Deforestation was identified as a major concern, emphasizing the need for sustainable land management, reforestation, and stricter regulations to curb illegal logging. Additionally, the health risks faced by charcoal producers call for improved occupational safety measures, better access to healthcare, and training on safe production practices.