This study aims at determining the level of technical efficiency of the Ethiopian tanneries andrnleather foot wear industries over time using stochastic frontier productionfilllction model. Allrnthe parameters of the frontier fimction alld the inefficiency model have been estimatedrnsimultaneously using Maximum likelihood estimation. The study considered II tanneries andrn28 leather foot-wear industries for the period of 2003-2007. The empirical result indicatesrnthat the trans log fill1ctional form with maximum likelihood estimation better explains thernproduction behaviour of tanneries as well as leather foot-wear industries. It shows that therernis significant technical efficiency difference among industries in the sector. The meanrntechnical efficiency of tanneries was 0.77, showing an increasing trend. Poor quality of hidesrnand skins and poor technology are the main constraint of the sector. Among tannelYrnindustries, those producing more value-adding products have better efficiency and scale ofrnoperation. The average efficiency of leather footwear industries was 0.84, with an increasingrntrend. Moreover exporting leather footwear industries have better efficiency and scale ofrnoperation as compared to non-exporting industries mainly attributed to the production ofrnbetter quality of product. External constraints including lack of modern marketing skill andrnfinancial resources alld unfair competition in the domestic market with cheap and less qualityrnof imported products contribute more to the low level of development of the sector. In orderrnto effectively utilize the potential livestock resource and benefit.liÂ·om the good reputation oj"rnthe leather of the country, efforts have to be made in improving quality of raw hides,rninfi"OStructure development, technical and skill development and availability of updatedrnmarketing information system. The creation of conducive business environment enhances thernsector's development and promotes the competence in the global market competition.rnKeywords: Leather sector, stochastic production function, technical effici ency, EthiopiarnJEL Classification: D24, L25, L67.