Inter ethnic conflict is one of the serious challenge in any multi ethnic federations like Ethiopia.rnConflicts have a negative effect on socio-economic and political life of a community. Hence, thernconflict between Hadiya-Halaba is a typical example. This study deals with the inter- ethnicrnconflict between Hadiya and Halaba ethnic groups that live together in Misrak BadawachornWoreda in Hadiya Zone in South Regional State. The main aim of this thesis is to examine thernroot causes, aggravating actors, effects of this conflict and conflict resolution mechanisms in thernstudy area. For the purpose of this study the research methodology was designed the qualitativernone. For the primary data the key informants were selected by using judgmental/purposivernsampling technique. It enhanced best information to achieve the objective of this thesis. Throughrnsemi-structured guideline questions in-depth interviews, two Focus group discussions from eachrnethnic group and from field observation the primary data were collected. The secondary sourcesrnwere also used from written documents, books, and internet sources. The study revealed that thernroot causes of this conflict are Halaba ethnic group who are living together with Hadiya in studyrnarea request demarcation to separate from Hadiya of Misrak Badawacho Woreda. Their mainrninterest is to include into Halaba Special Woreda for exercises self-administration. WhereasrnHadiya group strongly opposed against incorporating with Halaba special Woreda and tornmaintain their traditional territory integrity and claiming as their possession. The other one wasrnthe competition between the two groups on arable land for personal cultivation. In addition tornthese, isolation of Halaba from power sharing in administrative structures, the use of languagesrnon service delivery and primary education and lack of sufficient public services are becomerncauses for the recurrent conflict between the two ethnic groups in the study area. Therninvolvement of internal and external actors aggravated the conflict. Human and material costs,rnbreakdown of law and order in the area were some effects of this conflict. Regarding to conflictrnmanagement by the effort of Regional and local governments used different modern conflictrnresolution mechanisms incorporating traditional resolution method the conflict was resolvedrnthrough peace conference. Therefore, the study argues that inter ethnic tensions are prevalent inrna new federal system that attributed to lack of skilled managing in lower level of governmentrnstructures. However, the FDRE constitution guaranteed the rights of Nations, Nationalities andrnpeoples. Besides, the FDRE government established all conflict managing institutions like HoFrnand MoFA. Moreover, Regional and local governments manage conflicts through joint or intergovernmentalrncollaborative mechanisms. Therefore, the system of federalism offered a means tornmanage and transform conflict among the diverse ethnic groups and grant the self-rule. Finally,rnconsider to this conflict the possible solutions underlined recommendation. Regional and localrngovernments should provide better public services, training lower level of administrativernstructures about the federal setup, advancing good governance, implement the developmentrnstrategies in the conflict area and others.