This qualitative research was conducted at woreda I of the Udela sub city in Addis Ababa, Ethiopia withrnthe overall aim of assessing the overall livel ihoods situation of MSE operators specifically by examiningrnissues related to context, capital assets, role of institutions, policies and processes, and finally thernlivelihood outcomes of working in MSEs. The study targeted those cooperative MSEs engaged in metalrnand wood work activities. The data generated to meet these objectives were collected via semi- stmcturedrninterviews, key-informant interviews, focused group discussion, and non-participant observations, whilernsubsequent analys is was done in light of the Sustainable Li velihoods Framework (SLF).The studied operators and their MSEs were vu lnerable to many conteJ'tual factors with both facilitativern(such as the prevalence of free market system, decentralization, federalist state stmcture, price ceiling,rnpresence of general favorable policy environment and political leadership) and hindering ( like marketrnshortage, misconception of the society, inflation, high and increasing price of inputs and basicrncommodities, poor access to social facilities and infrastructure, tenure insecurity, inconvenient workingrnplace, and bureaucratic work procedures) roles.In relation to their level and access to various types of capital assets, the operators have relatively betterrnaccess to and level of social, political, and human assets. It is also found that, al though not equal to thernlevel of possession of the previously-indicated three types of assets, the operators own a significantrnamount of financial and physical assetsA number of formal and informal governmental, non- governmental, private and commercial institutionsrnhave played helpful role during the establishment and operation of the studied MSEs through creatingrnbetter policy environment, organizing the operators to form MSEs, credit and training provision,rnincreasing the political capacity of members, and finally prov idi ng mutual support. Yet, some of thernshortcomings associated with these institutions and with an adverse effect on the MSEs are inflexiblernworking procedu res, lack of commitment and responsiveness, and adopting unsu itable policiesIn due course, it was found that the problems chall enging the targeted MSEs were market, institution,rnoperator, MSE and society related. The reported outcomes of this livelihood strategy were increasedrnincome and household asset ownership, better access to food and health services, increased exposure andrnlevel of technical and other social skills, becoming a law-abiding, self-confident, self-re liant, andrnproductive individual with enlarged social and political capacity. The study mainly suggests suchrnmeasures as alleviating the market problem of the MSEs; improving the provision and current state ofrnpublic infrastructures; and increasing the capacity of executives and the operators themselves.