The purpose of the study was to assess the current practices, challenges and prospect of e-learning in Electrical and Computer Engineering Department Addis Ababa University Institute of Technology. The study participants where students, teachers, staffs, who are active during the study period. Population sampling is drawn using random sampling technique except interview participants were selected purposively. Primary data source was collected by means of questionnaire and in-deep interview. Questionnaire was main data collection instrument while the interview used for gap filling. Quantitative data were analyzed using descriptive statistics including frequency counts and percentage. Qualitative data were analyzed by using narration. The result indicated that there were several factors that decline the utilization of e-learning these include infrastructure problem, lack of awareness and motivation, lack unreliable internet connectivity, and unreliable electricity. The study shows basic computer skill among student and teachers were high (86%) and (100%) respectively. Computer skill using Leaning Management System indicated below average that students respond (35.4%) teachers (50%). Lack of e-learning policy, ownership of e-learning system and administrative attention negatively affecting the existing LMG system. There is huge potential if all the challenges elucidated to apply e-learning system in higher institutions in general and AAiT Electrical and Computer Engineering Department in particular. The outcomes of the result find out that the current practice of e-learning is not matured the infrastructure deployed believed is not ready and it has not shown significant improvement but improved from that of infant stage.