Gish Abay is the source place of the famous and legendary river, the Blue Nile, there are relatively significant amount of historical data which explain about the river and associated history of the area. However, written sources’ regarding the history of Gish Abay town is rare. Hence, its history is not well studied and documented until recent. This thesis aims to reconstruct the history of Gish Abay town. It looks its origin or early history by associating its role as the source place of Abay River in relaton with religious development, and the market center before the Italian occupation of the country in 1936. It also discusses the strategic role of the study area from various perspectives, its gradual growth and expansion due to the development of market and trade, political or administrative systems, socio-economic institutions, and infrastructures in the period under study. The study utilized primary and secondary sources collected from NALA, DMUAC, IES, John of Kenedy,Other Libraries of Addis Ababa University, DMU and BDU, ANRS government burearu’s and government offices of Sảkảla Wảrảda administration. The data collected from archival materials, books, journals, articles, reports, and other published and unpublished sources were supplemented and substantiated with oral sources collected using interviews conducted among thirty seven key informants. The information gathered from the above sources was carefully selected, crosschecked, analyzed, and organized for its authenticity and credibility so as to show the general image of the town. Data collected from IES, travelers account and oral sources provided pertinent information about the origin or early history of the study area and its role as a market center. The data also described that since the eighteenth century Gish Abay had been an aggregation of many small villages and settlements. Archival documents from NALA, particularly from Gojjam Governorate-General and the collections of Kebbede Tesemma convey the strategic role of the study area as a garrison center for the Italians to control the source of Abay River/Blue Nile, and its basin. Likewise, secondary sources consulted from IES and oral sources discusses its strategic role as the heartland of patriots, core center for patriotic resistance movement, and center for the beginning of new ideological expression or movement for further unity of the patriots against the enemy. Moreover, oral sources also describe the role of the market and trade for further growth and expansion of the town since 1947. These sources also briefly stated the role and contribution of the indigenous traditional administration and justice system in maintaining peace and security in the local area. As these and other archival sources from NALA and DMUAC indicated the town had various problems and challenges related to the development of infrastructure and socio-economic institutions. The sources examined generally revealed that for much of its history, the town was denied of important infrastructural and development initiatives. It is only around the close of the twentieth century that some progress in the development of basic socio-economic infrastructures and institutions began to appear. This study in general indicates that the evolution of Gish Abay as a town was closely tied with religious developments at the source of Abay River/Blue Nile and its role as a market center. Later, the Italian occupation of the area had served as a base for the shifting of the market center and its gradual growth and expansion.Since 1947, following the new arrangement, the town is officially announced and founded as the capital center of Sảkảla district.The town is strategically important from various perspectives.However, the frequent subjection of the district to administrative and structural readjustment or rearrangement in both regimes, and inadequate government attention had highly affected its development.Thus, both the town and the Wảrảda were neglected from any development activities for a long period of time until recent except some minor progress.