The aim of this work is to study the effect of acid rain on: a) Community diversity of AM Fungi in affected soils; b) Capacity of AM Fungal spores obtained from different soil to colonize plants growing in acidic soils of degraded lands. Studies on community diversity of AM Fungi in acid rain affected areas showed non significant effect of acid rain on AM Fungal spore percentage in acid rain fed soils as compared with spore percentage in non acid rain fed soils. On the contrary innoculum of AM fungi obtained from acid rain fed soils was more tolerent of acidification and other environmental stresses as compared with AM fungal spores obtained from agricultural soils. When innoculum of AM fungi obtained from both types of soils was compared for spore germination and root colonization in plants growing in acidic soils with water shortage, the innoculum obtained from acid rain fed soils showed significantly high spore germination and root colonization.