Conventional construction material such as sand, cement, aggregate, and reinforcing bar requires extraction of large quantities of material and the manufacturing process of those material are energy dependent and releasing of carbon dioxide and other pollutants. In addition, the cost of those construction material becomes very high because of energy required for production, high transportation cost and scarcity of resource. To address sustainability and the cost related problems of construction there should be a mechanism that could lower the construction material, this can be achieved by partially replacing the adopted material by the most abundant locally available material that can be found in depth and every one can access everywhere which is soil. Using soil as construction material for masonry work is a native technology as it is environmentally friendly, cost effective, ecofriendly, readily available and renewable material. However, problem is always observed on the strength and durability of mud construction. This thesis examines the use of cement, clay soil and sisal fiber additives to produce cost effective load bearing wall making block. Clay Soil around Bahir Dar Diaspora area were used and cement varying from 0% to 15% and sisal fiber having 50 mm length varying from 0% to 1.25% of the dry mass of soil were incorporated into the soil. Twenty four mix designing were prepared, for each mix four specimens having block size of 10cm*15cm*24cm were casted. A total of 192 blocks were casted and put under plastic sheet for 14 days and open for another 14 days to dry until it gets strength. Finally, for each mix laboratory tests including density, shrinkage, and compressive strength and water absorption capacity were done. The result indicates that the compressive strength and the water absorption of the optimum mix design were 10.325MPa and 14.625% respectively which is very competitive to that of higher class of HCB of 4.2MPa as wall load bearing and the water absorption is below standard water absorption of clay brick which is 22% according to ESC. The weight reduction is also 9.567% for the optimum mix design as compared from HCB. It was found that mud block is economical and durability, shrinkage and strength were improved. The optimum mix design, cement amount and fiber amount for given clay soil were mix17, 10% cement and 1% sisal fiber respectively.