This study aims to assess the stakeholder management practice and the challenges in the Ethiopian Construction industry, specifically by taking the case of Ethiopian Construction Design and Supervision Works Corporation. The objective of the study is to assess the stakeholder management practice in the sector, assess the key stakeholders of the sector and finally the challenges or critical barrier factors for effective stakeholder management practice. The study used both qualitative and quantitative approach and data were gathered through structured questionnaires distributed to employees of the corporation and in-depth key personnel interview were conducted with project managers of selected projects. This study used of descriptive research design method. The target populations of this study are project managers and employees of the company and selected organizations and stakeholders who are working with the companies. The collected data was analyzed using a statistical software called SPSS. The findings of this study highlight the practice of stakeholder management in construction projects. The data analysis revealed that the key stakeholders in the industry were customers, consultants, contractors, government agencies and businesses. The results of the survey show that most respondents argue that effective stakeholder management is critical to the success of project. Stakeholder Management Practice readiness level of the organization was found to be at level 2 or procedural. The challenges for effective stakeholder management were project planning, implementation, and stakeholder management practice. The study finally recommends the sector to develop standardized stakeholder management practice in order to reach project success. For project managers there should be continuous training regarding stakeholder management. Finally, knowledge of the new stakeholder impact strategies and supports a better understanding of how construction projects can withstand the impact of stakeholders and Project managers in developing effective project stakeholder management approaches.