It is readily understood that the problem oj housing shortage has been serious andrnrampant in Addis Ababa. The acute shortage oj housing in the city has beenrnaggravated by high rate oj population growth. migration oj p eople urban wards andrnthe prevalence oj poverty. The prevalence oj certain constraints in urban landrnallocation and hOUSing provision Jurther worsened the shelter problem in the city. Inrna nutshell. Jormal housing provision has proved to be inadequate in the city oj AddisrnAbaba. Thus. a considerable proportion oj the dwellers oj the city are Jorced tornsquatting mechanisms. especially in the p eripheral and expansion areas oj the city tornmeet their shelter needs.rnSquatting. though it appeared to be helpJul in alleviating the problem oj housingrnshortage to a certain extent. has negative implications to urban land developmelltrnand management.rnIn light oj this. the city govemment has been trying to control the squatting practicernmainly through demolishing squatter houses. However. the squatting problem hasrncontinued unabated owing to various reasons.rnThis study Jocuses on squatter settlements that are Jound in the Yelea Sub-City. Thernprincipal objective oj the study is to assess the nature. causes and impacts ojrnsquatter settlements onJormal urban land development and management. In order tornachieve the objective oj the study a questionnaire survey covering a total oj 240rnsample squatter household heads was carried out in the leebele 15 and 16 oj YelearnSub-City. The data was analyzed using SPSS data processing method.rnThe study revealed that the majority oj the sample squatter household heads werernmigrants. young age groups and male-headed households. They were Jorced to squatrnmainly due to lacle oj Jormal hOUSing provision in the central parts oj the city. In mostrncases. the Jormal mechanisms oj obtaining housing and construction sites have beenrnunaJJordable and inaccessible due to mainly low-income conditions oj thernhouseholds concem ed. Thus. most oj them optedJor squatting in the periphery oj therncity where access to land has been relatively easy. Migration. new householdrnJormation. constraints in housing and land marleet, low income and high rental pricesrnproved to be the major contributing Jactors Jor the expansion oj squatting in thernlocality. In addition to these causes. the tolerant attitude oj the govemment to letrnsquatters occupy hilly and green areas. the govemments' inability to control andrnexecute these settlements. ineffICient control oj the code erifC?rcement service to deterrnillegal housing construction. are some oj the Jactors that have contributed to thernemergence and proliferation oj squatter settlements in the study area.rnThereJore. in order to reduce in short term and ultimately solve the problem ojrnsquatting. the researcher come up with the recommendation that the root cause ojrnhousing shortage in Addis Ababa should be studied Jurther and low cost housingrndevelopments be encouraged by the middle level real estate developers as well asrnthe public at large.