The principal objective of this study is to describe and analyze the inte'1Jlay amongst thernlivelihood components that includes vulnerability context, asset ownership level, institutionalrnarrangements and livelihood strategies in explaining the existing socia-economic problems in twornKebeles in north Shewa zone ofOromia Regional State This research is inspired by the fact that the study area exhibits the worst forms of poverty andrnvulnerability to a range of natural shocks that highly impinge on the existing livelihoodrnconditions. Due to vulnerability to such facto rs as frost and waterlogging, peasants in the studyrnarea lose up to 75% of their standing crops during harsh climatic conditions. More than 30 % ofrnthe households living in the area do not have adequate food for more than six months a year. Thisrnproblem is jimher compounded by the fact that large segment of the population, more than 50 %.rnare unable to read and write and with no other skill to diversify their livelihood means.rnVulnerability to shocks believed to be the major cause in perpetuating the existing low level ofrnliving standard and poverty. The issue this study tries to discuss and address is that can this staternof affair be minimized and reversed witli an integrated approach? How for the existingrninstitutional arrangements playa facilitative 01' inhibitive role in extricating the people from thernexisting appalling livelihood condition? What plausible livelihood options one can envisage inrnminimizing the effect of vulnerability to the natural shocks? 1n tlying to understand and explain the existing socia-economic condition this study usesrnSustainable Livelihood Framework, which is a holistic approach alld address all issues ill arnmultiple-scale style, to guide the whole data collection and analysis activities. Using thisrnframework all attempts were made to see the linkage amongst aI/livelihood components and triedrnto see how for each of them are reinforcing each other in affecting poverty and vulnerability. In generating the required information the study has employed instruments from both qualitativernand quantitative research approaches. A house-to-house survey on 112 sampled households,rngroup discussions, in-depth interviews and observations were used in collecting the primOlY andrnsecondOlY data. The main findings indicate that the poor livelihood condition, as exacerbated by the existingrnvulnerability context, finds its causes from different sources. All causes are velY muchrnintermingled in a number of ways. The poorest and the 1I10st vulnerable ones do not have thernstartup capitnl and other support to initiate new ventures like livestock rearing and minimizerndependency on crop; governmental and other outside support for most surveyed families found tornbe not adequate and unsustainable. Efforts in propagating such important livelihood means likernirrigation are extremely limited. The absence of the right institutional arrangements, the absencernof long term visionGlY plan (the current focus seems on piecemeal projects) and the less emphasisrnin conSidering the various potentials found to be critical areas that needs serious rethinking andrnattention so as to minimize the effect of vulnerability and improve the livelihood conditions .