The purpose of this study is to assess the strategic human resources management practices and its associated challenges in selected Ethiopian banks. A sample of 345 employees was selected using Yamaneâ€™s sampling formula and 85% responses rate was attained. Mixed research approach and descriptive research design is used to analyse the data. Primary data was collected using self-administered questionnaires and interviews. Data analysis involved statistical computations for averages, percentages, standard deviation and chi square analysis. From the study, it was found that the overall strategic human resource practices in the selected banks were perceived positively. These banks accepted their HR professionals as strategic partner and evaluating SHRM in surveyed banks is a popular practice that each employee has clearly defined duties. Major challenges included insufficient resource allocation, lack of cascading business strategy statements to HR activities and the prevalence of group favouritism and political affiliation. Thus, this study concludes that even if the practices of SHRM implementation have been in good direction in the surveyed banks, the failure of effective implementation of HRM policies that created a mismatch between human resource policies and practices. It is suggested that there should be concrete partnership between senior management and HR professionals to effectively maneuverer the implementation of SHRM and HR professionals should be empowered to initiate organizational change with in their domain.