Urban centers’ municipalities constitute an important part of local government in Ethiopia. There have beenrnmany problems observed in the civil service institutions of the country including municipalities for manyrnyears. For this reason, the government has implemented service delivery reform as part of the country’srngeneral political and economic restructuring programs. The major objective of this study is to assess thernachievements recorded and to analyze the challenges encountered in implementing the SDR in KMS andrnHM. Primary data were collected from clients and staff of the two municipalities based on disproportionaternstratified random sampling technique complemented with interviews and secondary sources. Since similarrnstudies were not conducted before in these municipalities, the study is believed to be essential for itsrnoriginal findings and groundwork for future studies to build upon.rnFrom the essential conditions for the implementation of SDR, Strategic Planning and Management (SPM)rnwas designed in both municipalities. Business Process Reengineering (BPR) has not been implemented.rnAllocation of budget, suitable offices, assigning trained manpower, awareness creation as well asrnestablishing one stop service delivery mechanisms are not implemented sufficiently. Customers' informationrnaccess is relatively good in KMS but insufficient in HM. Hence, the preconditions for the reform measuresrnseem undeveloped. Though its implementation is very poor, KMS has designed service standards for basicrnservices but not in HM. KMS has empowered departments for public service delivery. However,rndecentralization and outsourcing of services are not undertaken in these municipalities. Consequently,rnefficiency of municipalities is reduced in implementing SDR. Commitment and attitude of officials andrnemployees, accountability, effectiveness and result-oriented work evaluation have been improved relativelyrncompared to the situation before the implementation of the SDR. But it is insufficient.rnBy and large, the municipalities’ human resources and the system itself are central reasons for thernincreasing widespread perceptions of the general public that have difficulty in receiving service timely and inrna cost-efficient manner. The problems of the municipalities require thorough diagnosis and sustainedrnthought about the way to bring attitudinal changes. The SDR measures need to be executed throughrnfulfillment of necessary conditions such as awareness creation; one-stop shop service deliveryrnmechanisms; Business Process Reengineering; and allocation of sufficient financial budget, amongstrnothers. Moreover, staff training and continuous monitoring and evaluation of the reform should be done withrnthe commitment of municipal leaders