Public transport priority, as the primary means to solve the problem of urban traffic congestion, has become a consensus among the traffic management department around the world. The bus lane is set to implement effective measures for public transport priority. It can improve efficiency, reduce traffic congestion, improve urban traffic overall operating environment. This study used structured questionnaires to get the perception of passengers and analyze responses for the purpose of investigating the effectiveness of bus lanes in the city. The aim of this research was to assess the effectiveness of the bus lane system in Addis Ababa from Mexico roundabout to German roundabout. It is the first and the only road segment bus used in the city. Different data were collected for the purpose of this research mainly through primary sources and some data were have been acquired through secondary sources, the selected parameters used to measure the effectiveness of bus lane system for this study are service rate, reliability of service, time spent in journey, frequency of service, speed, safety and security, and comfort and convenience. To determine the level of users’ satisfaction the study used the multiple linear regression analysis done by the statistics software SPSS statistics Version 23.0. From Multiple linear regression model, all variables were found to statistically significant at 95% confidence level. The adjusted coefficient of determination (R2adj) value comes out to be 0.709 which indicates 70.9 percent of overall passenger satisfaction with the bus lane service. The validation study suggests that the regression model is applicable for the determination of the level of satisfaction of the bus lane. The results of the quality of service in terms of LOS analysis for the given transit service during the study period indicates good quality of service. From the analysis to Northbound direction it is shown that LOS A for road segment from Sarbet to Mexico, its due to high enforcement Mekanisa to Abo mazoria LOS of C this is due to the bus lane is occupied with other vehicles and luck of enforcement but for both road segments German roundabout to Mekanisa and Abo mazoria to Sarbet the LOS B. On the hand the Southbound direction all road segment has similar LOS of B. From the travel time data collection, the average travel time of the road segment to Northbound and Southbound direction is 27.7minute and 28.31minute respectively.