In GTP-II period; poor project management, capacity limitation, lack of integration and finance, technology gap were identified as challenges to the construction sector. This can be minimized through incorporation of technologies that maximize building production rates and efficiency in the construction industry of Ethiopia by resolving the constraints. Building parts produced in the controlled environment (under factory) are better than cast in-situ due to several reasons. Industrialized Building System (IBS) is a construction system that utilizes pre-fabricated components and production in continuous process, change of thinking and practices for continuous improvement of efficiency, optimizing standardization of products and its mass production. It includes the logistic and installation aspect of it, done in proper coordination with systematic planning and integration, positioned and assembled into structures with minimal additional site work. With this respect, this research was carried out to assess constraints that affect the wider implementation of IBS and identifying key factors that assist successful implementation in the construction sector of Ethiopia. To address the constraints and key factors for successful implementation, qualitative and quantitative research methods were applied. The constraints and key factors for successful implementation were ranked according to their relative importance in the implementation of IBS in Ethiopia. The extent of use of IBS in Ethiopia were assessed in terms of distance to project site, building functions to identify appropriate IBS, height of buildings and other related issues. The results from questionnaire survey were correlated and discussed with the data gathered qualitatively. The largest number of constraints lied on the knowledge and awareness of stakeholders. Conclusions are made based on respondent’s perception on the constraints and areas for possible solutions to existing constraints, along with conceptual framework model is proposed to clear the picture of IBS implementation. Recommendations are also forwarded on government’s role, consultants’ and contractors’ attitude and for organizations and institutions’ based on current situation of the construction sector.