This study analyzes the nature of poverty|chronic versus transient|and householdrnvulnerability to poverty in rural Ethiopia using panel data from the Ethiopia Socioe-rnconomic Survey (ESS). Much of the poverty observed in the sample is transient inrnnature, and the proportion of persistently poor households among the chronically poorrnis relatively low. Quantile regression is used to see whether the same set of variablesrndetermine chronic and transient poverty. The results suggest that processes that gen-rnerate the two types of poverty are di erent; while household characteristics such as sizernof land owned, value of crops, and number of livestock were signi cant in determiningrnchronic poverty, they do not a ect transient poverty. This implies that measures ap-rnplied to deal with chronic poverty may not have an impact on transient poverty andrnvice versa. The analysis of vulnerability to poverty is important to design appropri-rnate forward-looking antipoverty interventions. This study measures vulnerability asrnthe probability that a household's level of consumption falls below the poverty linernin the future. Vulnerability is found to be higher among the poor and exhibited anrninverse correlation with a household's ownership of assets. Moreover, vulnerability isrnmore widespread than poverty. The probability of being vulnerable was higher forrnhouseholds who have faced agricultural shocks and are endowed with less human andrnphysical capital. Focusing on reducing risk and its consequences, through safety nets,rncredit and insurance schemes, in addition to raising the average level of well-being, isrnimportant to minimize vulnerability.