Improving water and sanitation service provision requires actions that address social,rnadministrative and financial dimensions. Water supply and sanitation services are two of thernmost important, interconnected and vital sectors that have a significant roles in improving thernlivelihood of communities. The aim of the study was to investigate the challenges of waterrnsupply and sanitation. In this study the research questions were identify major challenges ofrnwater supply and sanitation, assess effects of inadequate of water supply and sanitation andrnwere identify source of water supply in Sululta Town. The study used descriptive researchrndesign, and to select the target population and interviewee, simple random samplingrntechnique was employed in the study to select the required information from 391 households.rnBoth primary and secondary data sources applied for the study. The primary data wererncollected via questionnaires, interview, Focus Group Discussion and field observations.rnWhereas the secondary data were extracted from different published and unpublishedrnmaterials. The findings of the study revealed that rapid population growth and urbanization,rninstitutional capacity, inadequate finance and technology capacity were the major challengesrnof water supply and sanitation, the majority of HHs consumed less than 11-15 liters/ person/rnday individually which was below WHO minimum standards of 20 liters/person, Diseasernoutbreaks and socio-economic impacts were the major effect of inadequate of water supplyrnand sanitation in this Town. The idea obtained from FGD (Focus Group Discussion) showrnthat, households susceptible to high costs to buy drinking water from vendors and werernexposure to unprotected water sources that caused diseases because the water interrupted forrna long time. Hence, good management, increased awareness, access to adequate water supplyrnand basic sanitation, interconnectivity of the people and government, giving attention onrnwater supply and sanitation, increase building capacity and increment of discussion amongrnconcerned body are the most important to solve the problem faced in Sululta Town.