Microfinance is one of the most powerful tools for combating poverty primarily byrnproviding financial services to the excluded segments of the society so as to run theirrnbusinesses, build assets, smooth consumption, and manage risks. As, micro financernindustry as a whole is challenged by the need to reach the excluded segments/poor andrnat the same time being financially self-sufficient/sustainable, this study has designed tornassess commercialization performances of . MFIs in Ethiopia along with relatedrnchallenges and implications, at least to indicate the current position of Ethiopianrnmicro finance industry for researchers, practitioners and policy makers.rnThe study used both secondary and primary data collected from selected MFIs and keyrnstakeholders such as NBE and AEMFI With regards to data analysis, the studyrncategorizes the sample MFIs based on affiliations and scale, and made descriptive andrntrend analysis, and in-depth comparative analysis through One Way ANOVA andrnKruskal-Wallis test, and Applied Pearson Correlation Coefficients on key performancernindicators.rnAs per the study findings, Ethiopian Microfinance Institutions have shown continuousrnimprovements in the commercialization performances through time though there arernlimitations. Here, government-backed and large MFIs peer groups have proved to bernefficient, profitability and sustainability. As a result of better efficiency and scale ofrnoperations, these groups also charge low interest rates and beller breadth of outreach.rnWith respect to the depth of outreach. however the means differences were notrnsignificant, NGO-backed and small MFIs seem to reach the poorest section of the society.rnNonetheless, the study has also proved that the level of mission drift as a result ofrncommercialization of micro finance operations and administration is not significant. Key Words: Microfinance, Commercialization. sustainability and outreach