In this study the nature and degree of the bi-causality relationship between poverty andrnfertility is explained. The study used data from demographic and health survey ofrnEthiopia of the year 2005. Poisson regression approach for multivariate analysis ofrnfertility was employed. Fertility is analyzed by considering the number of children bornrnto a woman with in her life time, and "asset index" was constructed from ownership ofrndurables and housing characteristics as proxy for economic status.!t was found thatrnfertility and poverty have different relations in urban and rural areas. Strong positivernrelation is observed in urban areas. But it was found that poverty shows J curve causalityrnonto fertility. Fertility is negatively related with both low income and high income levelsrnof household; however it shows strong positive relation with middle income households.rnEducation, age at first marriage of female, employment and contraceptives have a strongrnreducing impact on fertility. In addition education plays a significant role in curbingrnpoverty by increasing the productiveness, employment opportunity and empoweringrnwomen. To alleviate high fertility and poverty, one can follow to routes. First, by reducingrnpoverty incidence through better access to education and thus employment opportunity, rnwe can address high fertility through improved accesses for education, as it increases rnopportunity cost of child bearing, delay marriage, and increases awareness contraceptive rnusage The second way is, directly targeting high fertility through family rnplanning to reduce poverty in Cadence. Balanced economic growth and population growthrnwill help government to provide nations with better social service and to produce morernproductive generation through provision of education, better employment opportunity andrnimproved health care service. It needs policy intervention to expand education and familyrnplanning programs with better contraceptive access to low income women in both ruralrnand urban areas. Attention should also be given to ways of reducing social factors whichrnencourage early marriage so as to improve the social and economic power of women.