Monitoring and evaluation (M&E) is the most important component in the projectrnmanagement. Despite its importance, the effectiveness of M&E system is affected by variousrnfactors. Addis Ababa HIV/AIDS Prevention and Control Office (AAHAPCO) runs HIV/AIDSrnprojects which are supported by government of Ethiopia and international organizations.rnThis research aims to assess the practices of M&E in AAHAPCO and identify the challenges.rnThe method used for this study was census. This method was selected for two main reasons.rnThe first reason is the number of staffs who were engaged in project implementation andrnM&E activities were few. The second reason was to obtain sufficient data from thernaforementioned staff. During data collection, out of the total project and M&E staffs whornwere supposed to be fill the questionnaire, more than 90% of them filled and returned thernquestionnaires provided to them. The research found that although most of the respondentsrnhave first degree and ample work experience in project management and M&E, majority ofrnthem did not have sufficient knowledge about M&E policy, framework, guidelines andrnprocedures of the office because they were neither oriented nor provided these documents atrnthe time of or after employment. The second finding of this research is that M&E is practicedrnregularly and in participatory approach and also the management utilise the informationrnproduced by M&E staff. However, the M&E officers do not have sufficient technicalrnknowledge of M&E but perform their activities using the tradition method that they were toldrnto do. The third finding is that the practice of M&E is challenged by lack of budget, thernexistence of different reporting requirement by different funders, time consumingrnimplementing activities, and lack of skill in M&E. Thus, it is recommended that AAHAPCOrnshould build the capacity of M&E officer by providing orientation and providing the M&Ernpolicy, procedures and manuals to new employees and also enabling the old-timer M&E staffrnto get training or formal education in M&E. Moreover, AAHAPCO should allocate sufficientrnbudget for M&E activities.