Taking the empirical database and gaps the main objectives of this study was to assess thernimpacts of foreign direct investment on human capital formation in Addis Ababa, Ethiopiarnmanufacturing sectors mainly through basic channels of educational advancement(ED),rntraining(TR), Research and development (R&D) and skill & knowledge transfer(SK).Therefore,rnthis empirical study was conducted to understand the impacts of FDIs on human capitalrnformation Addis Ababa Area Zone. A theoretical foundation was compiled for the study based onrnthe literature review. The research is cross-sectional field survey. For this study a probabilityrnsampling was used, 351 employees were selected as the sample of the study. Five point likertrnscale questionariesâ€™ were adopted and distributed to 351. 336 respondents filled the questioners.rnThe frequency, descriptive statics and regression analysis were used to analyze the studyrnhypothesis using SPSS version 23. The results of the study indicated that the factors listed in thernstudy have a significant effect on human capital formation. Moreover, the results of the studyrncome up with findings training provided by the foreign firms to the employees is the mainrnchannel of human capital formation done FDI and the level, quality of infrastructure and lowrninstitutional support and linkage comparatively affecting the role of FDIs on human capitalrnbuilding process.rnKey words: Human capital, FDI, Educational advancement, Training, R&D, skill &rnknowledge transfer