The conflict between Ethiopia and Eritrea has brought a major setback to the peace andrnsecurity of the two countries with devastating impacts against the wider Horn of Africa.rnEfforts made to bring the warring parties to a lasting solution have continued to fail. Thernconflict is more deeply rooted and complex than a simple territorial issue. In the process,rnthe mediator's efforts including the Algiers agreement have failed to resolve the crisisrnbecause of lack of proper understanding of the root causes of the conflict. This has ledrnboth countries to remain in 'no war and no peace' situation, with the potential forrndestabilizing each other.rnAs is often said, 'knowing the problem is half way to the solution', the key to the wholerneffort in resolving the Ethiopia-Eritrea conflict is to be found in deeper analysis of whyrnthe previous efforts had fai led and thoughtful inquiry of critical factors that lie beyond thernsuperficial causes of the conflict. Having a clear understanding of the root cause of thernconflict is very important to make an assessment of the attempts made so far have helpedrnto end the hostility or they have just perpetuated it. To this effect, this study identifiedrnpolitical and historical factors as a subsidiary causes while territorial disagreement hasrnbeen a pretext. It argued that the economic issues and the conception of militaryrninvincibility were comparatively the cardinal causes of the conflict.rnFinally, the research concludes that the way out from the current deadlock depends on thernlegal and political options. But both these options did not have common ground and lackrnthe critical element of a win-win approach that can reconcile both parties' respectivernnational interests. Even though the issue still remains largely as a legal case, its final andrnsustainable solution depends on comprehensive political dialogue and concerns.rnTherefore, the thesis finally proposed the need to undel1ake a series of mutual interestrnbased negotiations and the initiative along with committed political dialogue andrndemarcation as a creative approach to end the current stalemate .