The growth of youth unemployment is one of the critical socio-economic problems whichrnEthiopia is facing today. That was caused by socio-economic and demographic factor. Thernintensity of the problem is high in urban areas in general and in Sebeta Town in particularrnwhere youth face serious challenges in getting employment. The flow of large number of youngrnpeople into Sebeta Town has paved the way for the rise of varied social problems amongstrnwhich is youth unemployment. This study was set to assess the socio-economic andrndemographic cause and emerging challenges of youth unemployment in Sebeta Town. Thernstudy was primarily based on descriptive qualitative information and quantitative data. Thernprimary data were collected from 386 youths selected randomly, key informants interviews andrnfocus group discussions (FGD) were used to collect information and data. The socio-economicrnand demographic cause and emerging challenges of youth unemployment vary based on thernage, sex, marital status, migrant status and educational levels of youth. The analysisrndemographic caused showed that marital status was statistically insignificant challenges ofrnyouth unemployment in study area. Based on the findings of the study, Addressing the causes,rnchallenge and empowering women and giving advice to migrant youth, maintaining the rapidrnpopulation growth of the town with concerned institution, increasing investment on trainingrninstitution and linking the training institution with labour market.rnKey words: Youth, migration, population growth, youth unemployment