The aim of this research was to assess factors that affect the sustainability of railway service inrnEthiopia in case of Ethio-Djibouti Railway Sh. Co. The specific objectives of the study were tornidentify the successful indicators of sustainability benefit of Ethio-Djibouti rail way service,rnassess the major challenges for the sustainability of the railway service in Ethiopia and explorernthe methods of the corporation to ensure the sustainability of railway service in Ethiopia. Tornachieve the objectives of this research, descriptive research design and random samplingrntechniques were applied. When collecting the necessary data, structured questionnaire andrninterview were used in the study. The study found that economic, social, environmental, andrntechnical, coordination and communication indicators of sustainability were not successfullyrnanalyzed in different stages of Ethio-Djibouti railway project. The finding also shown that lackrnof skilled man power, technology, low-quality of construction and shortage of power were thernmajor challenges for the sustainability of railway service in Ethiopia. Moreover, to minimize thernchallenges and to insure the sustainability of railway service in Ethiopia the applicablernapproaches of ERC were enhancing the skills of man powers, enhancing the skills ofrnmanagements and adopting public-privet ownership. Finally the study recommended that, betterrndecision makers to be consider for development of training package in order to improve thernquality of human resources and ERC should follow each and every asset to monitor and takernrelevant action for what is unfair of the project.