In this era of globalization, where mixity of cultural fabrics are increasing and where the advancementrnof technology is taking place, it becomes challenging to protect the vernacular house, compound andrnsettlement(HCS) from influence. So there must be way of appropriating the influence and enhance thernvernaculars in going along with the transformation. In order to achieve this, the research aimed to understandrnand record existing situation of the vernacular house compound and settlement of Gurage in terms of physicalrnand spatial aspects; which then check and show the existence of transformation in reference with its originalrnsetting. It also investigates factors and actors of the transformation and evaluates it by checking criticality ofrnfactors and contextuality of solutions provided. After which it is summed up with recommendations. Detailedrncase study research method is employed in addition to qualitative and quantitative analytical methods tornachieve the research’s objectives.rnAfter exploring, recording and analyzing existing situations of the Gurage vernacular house, compoundrnand settlement(HCS) it proves that there exists transformation. The transformations found out based on thisrnresearch are both externally and internally triggered which are named as exo-generic and endo-genericrntransformations respectively. In which governmental organizations, non-governmental organizations and thernpeople themselves, directly or indirectly, play their role in the process. Appropriateness of the transformationrnis tested through criticality of factors,which causes the transformation, and contextuality of solutions. Basedrnon this test some are critical and contextual, critical and non-contextual, non-critical and contextual and noncriticalrnfactors and non-contextual solution.rnIn the process of physical and spatial transformation it is found out that hidden or indirect factors alsornhave great impact or contribution, like population growth and economic status. It is also found out that mostrntransforming elements are adopted from a common rural town housing typology ‘korkoro bet’ to overcomernchallenges of the vernacular ones and/or other influences. This is an indicator showing demands for thernprovision of appropriate alternative design solutions to be adapted or implemented directly in the area.rnThis research also proves that transformation of vernacular house, compound and settlement(HCS)rnis inevitable. So, one possible option to keep and enhance the vernacular fabric is to guide the transformationrnin an appropriate way