This study aimed to find out the challenge and practices of physical education continuous assessment on students practical performance. To this end, the study tried to answer the following basic questions: what is the status of the implementation of continuous assessment of students practical performance in PE, what are the attitudes of PE teachers and students toward continuous assessment of students’ practical performance and what are the challenges facing the implementation of CA in students practical performance. In order to answer the stated research questions descriptive survey design was applied. Both qualitative and quantitative approaches were used. In this study both primary and secondary sources of data were used. The researcher selects all secondary schools in the woreda. Physical education teachers were chosen in availability sampling technique whereas students were randomly selected from the sample schools. Generally, the sample size of this study was four secondary schools, 16 teachers, and 376 students and four school principals. Totally 396 respondents were selected. There were four research instruments that were employed to obtain information from the subjects of the study. These were questionnaire, interview, and document analysis and field observations .the data was analyzed by using SPSS version 25 by using mean and standard deviation. The analyses of the data conducted from those instruments have revealed the following findings: Concerning the implementation of CA at the governmental high schools, it was found ineffective. Concerning the attitude of teachers and students toward continuous assessment the study also revealed that teachers exhibited the positive perception and they believed that continuous assessment is necessary to increase the practical performance of their students, and students have also positive attitude toward continuous assessment. Lack of enough school facilities, playgrounds, large class size, and shortage of time, work load, and low interest of students, large instructional content and lack of commitment among teachers are found the major factors hindering the practice of continuous assessment in students’ practical performances