The purpose of this study was to assess the system of school principals’ performancernappraisal in primary schools of Akaki kality sub city. To this effect, descriptive survey methodrnof research was used. The research was conducted in Addis Ababa City Administrationrnat Akaki-Kality Sub-City based on purposively selected 13 government primary schoolsrnfrom which 129 samples were selected . A survey questionnaire consisting both closedrnand open ended questions were developed for Principals, Teachers ,Parents(PSTA )rncommittee and Students(PSTA ) committee. Moreover 6 wereda education officials and 6rnwereda Supervisors were also included in the study for interview. The performancernappraisal document found in primary schools was also analyzed. Data collected throughrnsurvey questionnaire was tabulated in tables and analyzed in descriptive statistical tools.rnThe findings of the study revealed that, performance appraisal was rarely used as methods ofrnidentifying area of weakness of principals, plan setting process for each assessment periodrnwas practiced insufficiently, criteria of PPA mostly involve external controls, that is, nornappraisees have freedom of choice to formulate, adapt or modify the criteria, there wasrnvisible gap in reviewing with employees to use performance review meeting to give feedbackrnand also gather feed aback from employees about what has been done well and what areasrnneed improvement. There were situations which makes performance appraisal as therncontrolling tools for the management instead of professional development, motivation andrnsatisfied, The research revealed the following as major problems of principals’rnperformance appraisal system .Some Appraisers rate employees on subjective criteria, lackrnspecific planned outcomes that can be tied to measurable results ,the inadequacy andrninappropriateness of the appraisal criteria and absence of sufficient rewards for betterrnperformer ,there are some reluctant Appraisers to devote enough time to the task ofrnappraising ,Poor administration of the overall appraisal process and Practice of biasednessrnand prejudice. In sum, the present principals’ performance appraisal system was consideredrnas ineffective to achieve its goal. Therefore, it is suggested that adequate training shouldrnbe given to both the appraisers . Besides, principals’ performance appraisal system oughtrnto be designed in such a way that it will meaningfully involve education officers, supervisors,rnprincipals, and other education stakeholders.