Efforts made so far to improve the existing water supply situation have been threatened by multiple interlinked factors. Knowledge of the problems of rural water supply and communities‟ management can help improving the problems of rural water supply in the future. Safe, adequate water supply is the basic needs, and essential for the socioeconomic development of a given society. However, majority of the people in Fogera Woreda rural settings still did not have access to potable, sufficient and sustainable water supply. The objective of the study was to evaluate the challenges of rural water supply schemes and evaluating the main schemes sustainability factors related to physical, financial, technical, institutional and environmental in the rural water supply scheme. Purposive and simple random sampling techniques to identify sample kebele, water supply schemes (villages) and household respondents in fogera Woreda were used 50 water supply schemes and a total of 150 heads of households were selected using combination of purposively and simple randomly techniques from the total 6,648 water supply user heads of households. Household survey, focus group discussion, key informant interview and personal observation and analyzed using SPSS version 21 statistical software. Lack of available materials, less water committee‟s effort, less senses of ownerships, and poor financial management problem are identified as the main problems. Most of the respondents were not actively participate starting from planning to post construction managements due to this most of water supply schemes were not sustainability for multiple reason. The evidence in the study area also indicates that poorly managed water supply scheme has adversely affected access to potable water supply especially where water supply schemes breakdown was with high frequency. The average sustainability score across water supply schemes were 4.58. This score indicated that the schemes were performing well on only 45.8% of the technical, institutional, financial, environmental, and social aspects. The study concluded that majorities of the water schemes and water services are not sustainable therefore, unlikely to achieve sustainable development in rural water supply. There is a need to give more attention to the communities about willingness and ownership of the schemes. A total of 58% schemes do not provide enough quantity of water to meet the 25 L/p/d national standards. Per capita water consumption in the Woreda is at only 12 liters. Woreda water development office need to be create and developed sense of ownership, improve institutional support, develop financial managements and construct new water schemes by mobilizing community in order avoid a large community using a single water supply schemes.