Rate of urbanization is high in developing countries like Ethiopia. Subsequently, urban areas have beenrncrowded by population increase due to rural-urban migration and increased need of housing andrnemployment. However, due to lack of comprehensive plan to accommodate emerging needs of urbanizationrnsurrounding rural ‘peri-urban’ areas become vulnerable for unplanned transformations. Although there isrnlittle attempt to study socio-economic and policy issues in the peri-urban areas, the area of spatialrntransformations in the peri-urban Hosanna is not studied so far. Therefore, the objective of this study focusesrnon investigating characteristics, causes and processes of spatial transformations happening on transitionalrnperi-urban areas. The study also suggest possible recommendations for the future planning.rnIn order to achieve the esteemed objective, this study used case study method since it is best for descriptivernand explanatory analysis. Therefore, two cases, Ambicho and Kidigisa, are selected to have comparativernanalysis too. In general, the study uses quantitative and qualitative methods to explore the extent and depthrnof the problem.rnThe study found out that spatial transformations in the settlements happens due to multiple factors such asrn‘selling’ land informally for economic improvement and fearing expropriation by government program,rnand land fragmentation due to densification. These factors transform farm land and rural settlement in torninformal residential areas. As a result almost all rural land holdings experience fragmentation and usernchange. Regarding housing type, four typologies of thatch roof houses are identified in these area. Thesernare ‘Goye’e’, ‘Jagara’, and ‘Sa’l mine’ and ‘ga’p mine’. Each of these typologies serve different purposes.rnHowever, the transformations in the area replaced these traditional thatch roof houses by modern CIS roofrnhouses ‘korkoro bet’. Newly introduced ‘korkoro bet’ has two typologies, these are ‘amora kinf’ andrn‘service bet’. Overall settlement transformations also include socio-economic change in which previousrnlivelihood base of farming have been replaced by commerce and some informal activities. Buying Bajaj forrnbusiness or sending family member abroad to generate remittance money are the main activities performedrnafter ‘selling’ of farm land.rnTherefore, in order to promote infrastructure and service provision and to formalize informal economicrnactivities, this study recommends local governments, community leaders and urban planners to takernplanning interventions through participatory approach. Planning should also consider livelihood base, sitesrncontext and vernacular building culture of the community.