In Ethiopia, specifically in Addis Ababa, there are many Eritrean and Somali Urbanrnrefugees. They put Addis Ababa in the top first priority area to live because Addis Ababa isrnthe capital city of Ethiopia and is the centre for national as well as internationalrnorganizations. Urban refugees have different kinds of livelihood challenges and opportunitiesrnand this research examines it.rnIn order to achieve the objectives of the research, descriptive type of research which is led byrnqualitative approach was employed. In-depth interview, key informant interview, focus grouprndiscussion and document review were the central data collection techniques. In this study,rnGofa Mebrat Hail for Eritrean refugees and Bole Michael for Somali refugees in AddisrnAbaba were selected based on their numerical upper hand as well as the prolongedrnsettlement of the refugees in the respective areas. In-depth interview was made with Eritreanrnand Somali urban refugees, key informant interview with officials from ARRA, NRC, DICACrnand Woreda officials from the hosting community. Purposive sampling technique wasrnemployed to select the research participants.rnThe finding of the study shows that there are several socio-cultural and economic challengesrnurban refuges have been facing: High cost of living, problem of cultural adaptability likernlanguage barriers, refugees low self-esteem, psychological instability and mobility, economicrncrises, conflict, security challenges, violence, theft and robbery are the main challengesrnassociated with livelihood strategies.rnThis research also indicates that there are opportunities available on the ground to be usedrnfor sustainable development and self-reliance: availability of supportive policy frameworksrnand cultural Similarity between the hosting community and urban refugees. Moreover, thisrnresearch revealed that urban refugees have both negative and positive impacts for thernhosting community. The positive impacts include strengthen socio-economic and politicalrnrelationship with neighbouring country, strengthened people-to-people relationship, transferrnknowledge and skills, increase work habits, contribute for labour market, and inject foreignrncurrency to the market. The negative impacts burdened on the hosting community arernaggravated the price of rental house, increase unemployment rate, injects deviant behaviourrnsuch as addiction, conflict and violence. This research has come to conclude that urbanrnrefugeeâ€™s livelihood strategy is vulnerable for risk and shock as the result of less sustainablernnature of their means of income.