After 1987 onwards sustainable development becomes a guiding concept defining nations growthrnand development aspirations. The recognition of the concept by the UN in 1992 UNCED takesrnthe concept to the international political arena. Since then different implementing instrumentsrnwere devised and efforts were exerted in harmonizing and conceptually defining development asrnmechanism of balancing environment and development. But the aspiration for balancingrnenvironment and development is subject to multiple interpretations and understandings thereofrnare multiple. Given this EPI is recognized as a conceptual framework for prioritizingrnenvironment over other economic and social issues and making as an umbrella concept drivingrnthe admission of the world poor to substantial level of modernization.rnThis stdy is mainly concerned on identifying challenges and opportunities for EPI in Ethiopia thernunderlining force driving such aspiration being sustainable social and economic development inrnEthiopia. Along with it identifying the issues necessitating EPI in Ethiopia is discussed, legal andrninstitutional framework for EPI explored and discussed and in addition what EPE is trying tornintegrate, how it is integrating, why it is integrating are identified. In doing so the studyrnadopted a desk review methodology and document analysis technique. The findings of the studyrnhave showed that the policy is comprehensive enough in defining the integration ofrnenvironmental aspect in to other sectoral and cross- sectoral policy areas. There are alsornregulations and proclamations guiding the specific implementation and prescribing behavior butrnimplementation thereof is handicapped by; Skewedness towards quick economic achievement,rnWeak and unstable institutions at the Regional levels; Absence of Sectoral Environmental Unitsrnin the Federal Sectoral Institutions; Lack of adequate infrastructure and skilled human resource;rnWeak environmental legislations enforcement capacity ; Financial limitations; Absence ofrnfunctional linkages among and between various state and non-state actors; Lack ofrnenvironmental awareness and limited integration of environmental issues in formal education;rnInadequate environmental information and lack of environmental information system andrnnetworking; Absence of environmental accounting systems in the National Income Accounting ofrnthe country or regions; Lack of awareness on environmental investment opportunities among thernprivate sectors; Poor implementation of punitive and incentive measures enshrined in differentrnenvironmental instruments. In order to minimized these challenges promoting environmentalrnawareness, strengthening regional environment laboratories, establishing environmentalrninformation system and networking, developing and implementing human resource developmentrnprograms, strengthening national environmental policy and strategy coordination mechanisms,rninitiating environmental accounting, promoting eco-investment, promoting environmentalrnresearch, developing incentive structure and enhancing enforcement capacity of both federal andrnregional environmental agencies is recommended