This study provides empirical findings on challenges of sustainable water supply systems inrnHarar town. Harar town has been experiencing multiple problems in getting potable water supplyrnin adequate quantity and quality. Even if after the installation of the modern Dire Jara waterrnsupply system which has expanded its service by drilling a number of boreholes, still the demandrnis not sat isfied and a number of people do not have access to adequate amount of potable water.rnDescriptive statist ics on major household characterist ics (household size, age, sex, marital status,rneducational level and income source) and key aspects or checklists of sustainability (bases forrnwater delivery, responsibility to fetch, the satisfaction le vel of the existing water supply systems,rnefficiency and equity of water supply management service, and water tariff setting) and waterrnsupply coverage were discussed. The study has confirmed that Harar town water supply servicerncould' not cover the demand of the town with present existing capacity. At present the coveragernof water supply is only 40 percent in terms of population. All areas of the town could not getrnequal and proportional service. Central parts get more water supplies while the peripheral areasrnremain without water. In addition to this, the tariff set is neither affordable for the majority norrngenerates sufficient revenue to sustain the service. The majority of victims of the problem are thernpoor as they cannot afford cOlmection charges. As a result, they are exposed to unprotectedrnsources and buy water from vendors at high price. The rogt causes of the challenging problemsrnare institutional, financial, human and material resource constraints. Taking this intornconsideration government has been implementing short, intermediate and long term plans inrnorder to alleviate the problem. The major copping strategies for the challenges are synclu'onizingrndifferent water sources, conserving water soW'ces, fam ily planning, demand management,rndemand oriented supply, participating different actors, mobilizing financial resources, andrnstaffing organizational structW'e with sk illed persormel and equipping it with material facilities.rnKey words: Water supply, demand for water, production, distribution, consumption, tariff,rnwillingness to pay, cost recovery: Harar.