The study focuses on the qualitative analysis of the dynamic linkage of poverty and healthrnin the urban setting, with a particular reference to Akaki and Teklehaimanot areas in AddisrnAbaba. The findings strongly indicated that multi dimensional factors of povertyrnperpetuate illnesses that are communicable and recurrent, deterring livelihood activitiesrnand thus progressively intensifying poverty. The bidirectional linkage of poverty andrnhealth is found to be entrenched in livelihood, environmental, and psychosocial contexts inrnwhich people live and interact. Analysis of these contexts revealed that, insecure sourcernof livelihood caupled with poor living environment significontly influence how peoplernunderstand health, and thus their responses to health challenges. Although the two areasrnrepresent distinct features of inner city and outskirt, the poverty and health challengesrnfaced by poor household were found to be similar in many ways among the two studyrnareas. Poverty seems to affects all members of households, but health outcomes werernfound to be worse among women and younger children. The study also revealed howrnpoverty shapes aspiration and people's life priorities significantly affecting people'srndisposition to health promoting activities. The study also attempted to gain insight intornhow people's coping strategies are shaped by various, household, community andrninstitutional factors. Paar peaple were faund to rationally make such choices, dependingrnon who is sick, what illnesses, ond attitude towards various measures including modernrnhealth care. People general.ly tended to be critical towards services provided inrngovernment facilities, though such complaints were minimal in Akaki where health carernutilization is low. In the analysis of social capital, traditional social networks in whichrnpeople belong were found to have both positive and negative impact on health promotingrnbehaviour and coping with health challenges. In addition, the impact of non-governmentrnorganizations on people's predisposition to cope with challenges of health and povertyrnwere also assessed. The findings strongly indicate that most NGO actions have very littlernimpact on enhancing people's capacity to cope with poverty in a sustainable manner. Inrnfact the impacts of some NGO interventions were found to be detrimental to existingrntraditional coping mechanisms. The recommendations of the study revolve around itsrnconclusion that serious consideration of these dynamic factors is imperative for healthrnpolicy to be effective in addressing the soaring urban health problems.rnKey words: Urban, Health, Poverty, Perception, Coping