Ecotourism is one of fast growing sector all over the world. It is often viewed as promotingrnconservation. Ethiopia also has great ecotourism potential. This study was conducted to assessrnthe ecotourislll potential, factors affecting ecotourism development, potential benefits ofrnecotourism development for biodiversity conservation of Kafa zone. In this study both primaryrndata and secondary data were used. Primary data was obtained through structuredrnquestionnaire, key iriformant interview, focus group discussion and observation. Secondary datarnwas obtained from published and unpublished materials, books, journals and project reports. Thisrnresearch used both qualitative descriptive survey as dominant method and some data werernanalyzed quantitatively as supplementary qualitative and quantitative data. The study was carriedrnout on three selected sites in Gedam, Mankira and Bonga 01 Kebele. A total of 124 samplernrespondents were identified using systematic sampling technique. Key informants interview wasrntaken. Besides to this FGD was held with community members. In the study area there are sornmany factors that affect ecotourism development negatively and positively. The study disclosedrnthat the community perceived eeotow'ism as an instrument for biodiversity conservation and theyrnwere willing to play an important role in the development of ecotourism by engaging themselvesrnin different activities. The analysis was carried out by using qualitative description andrndescriptive statistics with the help of SPss. Pictures, Percentage, tables, graphs and chart werernused to present the results of the study. Furthermore, Iriformation obtained from key iriformantrnand officials have been summarized and used in the triangulation of evidences. Informationrnobtained through personal observations was also included in the analysis. The study concludesrnthat there is a high potential for ecotourism development in the study area and ecotourismrndevelopment support the preservation of biodiversity that exist in the area. Whereas, there arernfactors that hinder the development of ecotourism such as lack of stakeholders' collaboration andrnsetoral integration, problems related to promotion, training and iriformation center in the studyrnarea. Therefore, in order to alleviate the challenges the researcher suggested that the existingrnresouces should be protected, designing continuous training for local community , attraction sitesrnof the area should be announced through mass media, design strategic policies and holisticrnplanning with incorporation of an integrated and collaborative approach were recommended.rnKey words: Ecotourism, Biodiversity and Conservation