The study examined the presence and the degree of practical implementation ofrntransformational leadership and its challenges as observed in government and privaternuniversities in Addis Ababa city. The researcher used a cross-sectional survey research designrnand a quantitative study methodology as well as questionnaire as data collection instruments.rnThe study used a combination of purposive, stratified and simple random sampling techniquesrnas associates to obtain tangible information related to the research problem. From a total 2359rninstructors and 102 leaders/administrative staff members in Addis Ababa, St. Mary’s and unityrnuniversities 190 respondents participated in this study. There were a total sample of 190 full-rntime employees, 48 leaders and 142 instructors, who participated in this study from variousrndepartments and positions of Addis Ababa University and two private universities within AddisrnAbaba city. The study employed quantitative research methodology. Data was collectedrnthrough questionnaire method which its reliability was tested with pilot test has a reliabilityrnvalue of Alpha 0.86. and analyzed A total number of 332 questionnaires, 190 MLQ for leadersrnand subordinates of both universities and 142 questionnaires for organizational performancerntowards transformational leadership practices only for subordinates from both universitiesrnwas administered, from 190 MLQ, 48 were goes to leaders and 142 to subordinates, while 142rnorganizational performance questionnaires were goes only to subordinates of the twornuniversities. The collected data was analyzed using descriptive and inferential statisticalrnmethods and findings are logically interpreted and documented to answer the three basic andrnspecific research questions from transformational leadership perspectives. This analysis hasrnreflected several perspectives of respondents on a variety of topics related to practices andrnchallenges of transformational leadership. Finally, conclusion is provided based on findings.rnThe final result shows that transformational leadership behaviors is practiced both inrngovernment (Addis Ababa university) and private (St. Mary’s and Unity universities), howeverrnthe results of the descriptive statistics shows that the transformational leadership practicernwere slightly better in Addis Ababa university than St. Mary’s and Unity universities.