The purpose of this dissertation is to explore the situations of participation at grassroots level with the particular reference to Bishoftu City Administration. The problems associated with public participation are lack of genuine participation, elite domination of decision making, lack of commitment by the state to create a space for public participation, unfavorable hierarchical arrangement of administrative structure, and weak local government capacity and irresponsiveness. These factors remain empowerment an empty and unfulfilled promise and prohibit equitable access to benefits of participatory development. The aim of the dissertation is to examine contexts, nature and extent of participation; and empowerment through participation. Through addressing these issues the dissertation advances knowledge of participatory approach, institution, and empowerment; and orients policy makers and administrators the institutional gap in collective public action. Pragmatism research philosophy is adopted to guide the overall process of the research. Mixed methods research approach is applied to address research objectives. Concurrent/parallel triangulation mixed method design (QUAN + QUAL) with equal orientation for both quantitative and qualitative strands is followed. The findings of the study indicate that there are general legal provisions about the right of the public to participate in the development of their affairs. However, there is serious gap between legal provisions and their implementation on the ground. The capacity of City Government is inadequate to facilitate participation in development. Participation is undertaken through financial, material, labor, and professional services. Financial contribution is a prominent over other forms, since it is a precondition to acquire public services and cost-sharing policy of City Government. Participation in development is top-down approach in Bushoftu City Administration, which characterized by elites’ domination of decisions making. Participation is influenced by employment in civil service and Non Governmental Organization, City Government capacity and responsiveness. The overall extent of public participation is low in Bushoftu City Administration. Participation in development results in a relatively better personal empowerment compared to social and political empowerment. It enhances economic empowerment through creating access to economic resources and opportunity structure that enhance economic empowerment. I conclude that if the public get favorable platform to participate in development activities and their concerns are given due consideration by the Government, it has the power to solve its problems by itself. However, public participation in development is not to the extent that brings transformation and does not bring people who are outside the decision making process in to it. The public is recognized as passive recipients of development benefits and clients rather than agent and participant in development efforts. The role of government has to be limited to facilitation rather than maker and provider of local development. The City Government needs intensive capacity building that creates responsive and effective public administration. The stipulation of explicit rules and regulations is required to guide participation and the sharing of benefits of participatory development. The proliferation of Community based organizations is necessary to facilitate public participation in local development.