This study tried to investigate the factors contributing to the practice and challenges of teachers’ performance appraisal .The study used descriptive survey design which used for the researcher to gather both qualitative and quantitative data. Also, the researcher used sample random sampling techniques and employed purposive sampling techniques because of the importance in providing the relevant information on teachers’ performance appraisal. Questionnaires and semi_ structured interview guide were used as tool for data collection. The documents of the school departments and the school administration from 2007-2009 had been seen in depth during the research was conducted. About 56 of the teachers were selected using simple random sampling by lottery methods for the questionnaire. Because, this technique gives equal chance for the respondents .About 22 school directors were selected by census sampling techniques. Two school supervisors were selected also by census techniques for interview. Then, to conduct this thesis, 80 of the respondents were selected from 136 of target population by using different sampling techniques. The result of the findings indicated that, poor (low) participation of teachers in formulating and utilizing teachers’ performance criteria, lack of pre and post appraisal conference with teachers, lack of the set process during appraising teachers’ performance, no regular discussion on teachers’ performance appraisal. Also, in availability of school facilities (infrastructures) and life status of teachers are the most contributing factors to the practice and challenges of teachers’ performance appraisal. On the basis of research finding the results of this study concluded that, teachers and leaders had no similar views on the procedure, purpose, implementation and the challenges of teachers’ performance appraisal in Nejo woreda primary school. Based the conclusion, the concerned bodies such as government, non-governmental organizations, teachers and others should give` awareness about the purpose and criteria of TPA seem to be lower than what is expected. All of them are required to have detailed knowledge and skills both in formulating performance criteria and in utilizing it. Finally, this study is interesting because of its newness and put paves by providing some information for further studies on the related titles.rnKey WordsKM=Kilo MeterTPA=Teachers’ Performance Appraisal