Cities in the world have faced many challenges like traffic congestion, air pollution, noisernpollution and accidents. These challenges especially traffic congestion, is however, expected tornaggravate in the nearest future. Due to congestion commuters travel time and vehicle operatingrncosts increase with fuel consumption and emission rates increase with pollutants increases.rnrnFollowing its economic development, Addis Abba has faced traffic congestion problems whichrncause chronic problems to both the road users and non-users. This paper mainly focuses onrntraffic congestion analysis and its economic cost by addressing traffic congestion causes, effects,rnpatters and especially its economic cost on the North-South corridor of Addis Ababa. In order tornanalyze traffic congestion, travel time approach was used whereas analysis of level of servicernanalysis was made using SIDRA intersection based on delay. Afterward, traffic cost is calculatedrnconsidering delay to passenger vehicles which includes operating costs, extra fuel wasted due torncongestion, delay to truck vehicles including operating cost, extra fuel wasted due to congestionrnby truck, business cost and finally environmental cost of traffic congestion. Then finally,rnmeasures to mitigate traffic congestion are recommended based on questionnaire and field visitrnstudy. rnrnBased on the analysis, it was found that total congestion cost including delay, wasted fuel andrnoperating cost of passenger vehicles and truck vehicles at each road segments on average isrnabout Birr 53.2 million per year. In addition, congestion has costs on the environment andrnresults show that when traffic congestion increases fuel consumption and emission of pollutantsrnincrease.rnrnFrom the different traffic congestion measures, improving current light rail transit is the mostrnimportant since by improving the current status of light rail transit, on the average Birr 25.5rnmillion per year cost of congestion is saved and 11,281.20 kg of CO2 emission is reduced perrneach road segment.