This thesis focused on the challenges and prospects of CBET development in Lake Zengenarnand its environs, Banja Woreda, Awi Nationality Administration. The thesis has used bothrnquantitative and qualitative approach employing both purposive and simple randomrnsampling. The study took a total of 11 0 samples to conduct and survey data based on primaryrnand secondary data sources through different instruments including questionnaires, keyrninformant interviews, focus group discussion, field observation and literature review. As arnresult, this study revealed that Lake Zengena and its environs is not only endowed withrnnatural tourism resources but also endowed with the cultural tourism resources. Besides, thernarea has a good scenic view with good accessibility and walkways around the lake. Amongrnthe major natural resources (Lake Zenegna, Darkan Mountain, Gubil Mountain and bamboornplants with their birds, animals and fauna species), cultural tourism resources (churches andrnmonasteries (Felege Hiwot Kidus Gabriel and Debre Mihret Kidus Michael), handicrafts,rntheir weaving methodology, the community's culture in celebrating festive periods (Timketrnand monthly festive of St. Gabriel monastery etc) are some of them. On the contrary to thernabundance and diverse resources, the area had limited practices of CBET and had nornsignificant infrastructure facilities that could cater to the needs and wants of the customers.rnThis study found that the area had faced different challenges that can hinder CBETrndevelopment in the area. The major hindrances identified include less government attentionrnand other SHs participation, poor infrastructure, lack of financial support, lack of skilled manrnpower, Use of lake as a source of "Holly Water" by the church. On the other hand, diverserntourism resources, good accessibility to the main asphalted road, location of the path way tornthe historic route and to the Ethiopian Great Renaissance Dam and nearness to differentrndestinations were the major opportunities identified. Besides, this study put on view that thernlocal communities could participate in preparation and provision of handicrafts, horsernrenting, guiding, sale of handicrafts and provision of food and beverages as well as rawrnmaterials as a CBET practice. All in all, Lake Zengena and its environs possessed an immensernpotential for CBET which can enhance locals' livelihood and that can conserve thernenvironment. To put this in effect, a good tourism development plan along with tourism policyrnhas to be developed to utilize the area's potential and to make the local communitiesrnbeneficiary from the development through tackling the major challenges.rnKey words: Lake Zengena, ecotourism, community based ecotourism development, challenges,rnprospects, potentials.