The main purpose of this study was to investigate factors that generate conflict between secondary school teachers and principals in secondary schools of Horro Guduru Wollega zone. It attempted to identify teachersâ€™ and principalsâ€™ view on conflict, the effect of conflict on school performance and the strategies used to manage conflict. In order to attain the objective of the study, both quantitative and qualitative data were employed. The study was carried out on six secondary schools that were selected using random sampling technique. The study involved 104 respondents from among teachers, principals and education workers drawn from 3 woredas of Horro Guduru Wollega Zone. Questionnaire and focus group discussion were the instrument of data collection. Frequencies and percentages were used to analyze quantitative data. Based on the result of the analysis majority of teachers have seen as conflict as bad and should be avoided while principals viewed conflict as good when managed effectively. The result of the study revealed that conflict has both negative and positive out comes on the organization. The points that suggested as recommendations were: school principals should use better mechanisms for the exchange to information concerning the general situation of the school and particular conditioned should be devised in the schools; higher educational officials should have to make policies, guidelines, rules and directives clear and workable in order to avoid barriers of for effective implementation of educational programs.rnKey words: conflict, effective management, leadership.