The urban informal economy sector plays a vital role in generating employment, incomerngeneration, and skill development. The contribution and the size of the informal economy sectorrnvary from country to country. It is the main source of livelihood for the people of many citiesrntoday. The objective of this study is to investigate the effect of Rural-Urban migration on therninformal economy sectors. The study was conducted in Addis Ababa city by taking Yeka sub-cityrnas a case study. The reason Yeka sub-city has been selected was that massive informal operatorsrnare concentrated. The study has used both qualitative and quantitative research methods. Bothrnprimary and secondary data have been employed and the primary data was collected throughrnobservation, survey, and key informant interview. The secondary data was gathered fromrnpublished and unpublished documents obtained from institutions in order to generate additionalrninformation for the study. The researcher has taken 331 samples of street venders for surveyrnquestionnaire. In-depth interview was also conducted with selected government officials. Thernstudy found out that there is a significant relationship between rural-urban migration and growthrnof informal economy activities. The study also reveals that informal sectors operators leave theirrnorigin in search of job opportunities and better life. In the study area the informal economicrnactivities is growing from time to time and also it is influencing widely the economic, social, andrninstitutional phenomena. Formal businesses are often complaining about unfair competition fromrntheir peers in the informal sector. Furthermore, informal economic activities are affecting thernmobility of people and the transportation system. As recommendation the regional governmentrnshould work hard in creating job opportunities and economic development. Rural economicrndevelopment is crucial element to prevent unnecessary rural- urban migration and informalrneconomy growth in the urban area. The city administration should give emphasis for informalrnoperators by providing loans and encouraging them to establish formal shops by giving training,rnand skills