Agriculture is one of the sectors most vulnerable to drought impact. The impact is even strongerrnin Africa, where agriculture is truly important for the daily subsistence, and where adaptiverncapacity is low. Therefore, it is crucial to increase the understandings of the concerned body andrnlocal community in the continent in general and in Ethiopia for future most likely droughtrnimpacts. This study uses the North Shoa Zone in Ethiopia, as a case study and examines therntrends of drought and its impact on livelihood in the region. It also answers the questions who isrnmore vulnerable and why, what are the local and institutional coping strategies and what are thernconstraints that aggravate vulnerability. The study uses personal observation, structured andrnsemi-structured interview to gather information from local people, government officials andrnexperts, and secondary data from published and unpublished sources, and systematicallyrnanalyzes this material both using qualitative and quantitative analysis. The result shows thatrndrought increases from time to time in the zone even if there is variation between and amongrnyears and it challenges the livelihood of the whole region. To cope up with the impacts, societiesrnuse savings, migration, credits, selling own assets (who own asset) and on-farm and off-farmrndiversification as strategy. The coping mechanisms provided by institutions is very weak and atrnits early stage in the zone. And the coping mechanisms available in the zone are not equallyrnimportant and practiced and are insufficient to cope with drought impacts. Thought allrnhouseholds in the zone are vulnerable to the disaster, the problem is more acute on the poor,rnwomen, large size family, children, old and disabled. Vulnerability is further aggravated by therndecline in the fertility of land, landlessness, unemployment, unavailability and inability of mostrnfarmers to afford agricultural inputs, fertilizer and selected variety of crop. The study suggests arnrelentless need to address these challenges both from short and long-term policy perspectiv