Addis Ababa is characterized by poor infrastructure. slums and shortage of houses all inrnconjunction with a rapidly expanding city population. To tacklc all these deep rooted problcms,rnthe ci ty government has made somc real measures like urban rencwa l projccts which is thc corernof my thesis. This study tried to assess the challenges and prospects of urban rcnewal projects through thernanalysis of case studies at Basha Wolde Chilo! in Arada sub-c ity of Addis Ababa. In most casesrnthe WBC inner- city has better in frastructural serv ices than in other parts of the Addis Ababarncity. As the physical structure and intj'astructural services have become deficient, however, thernneed for renovation is a matter of must.The data arc collected through both qualitative and quant itative techniques. The investi gation isrncarricd out from the perspective in which inner- city renewal is viewed as a ehallcngerneverywhcre. It a lso iden ti fi ed the possible benefi ts of renewal program for the urban low incomerngroups, for unemployment problems and the city at large. Based on the case studies analyticalrngeneralizations are made The finding ai' the study has shown the problems of the implementation, linancial shortages, andrngeneral problems: such as economic, infrastructure and social group as a challenge for thernproject. The find ing also indicated that the compensation given to the displaced communities (thernpri vate house ho lders) as unsatisfactory. Shortage of infj'astructures in the arcas whcre the localrncommunities were relocated and they are exposed in additional tran sportation costs. In addition,rnthe Social alienation among the relocated communities does exist. Equally important the thesisrnfindings of the project show that there are some improvement s. The impro vements which Irnhope (as author of thc thesis) wi ll contribute in mana gi l~g urban land efficiently and effectivelyrnto change the image of the relocated communities (the ta rgeted population and the surround ings)rnin particular and city of Addis Ababa in general.