The different ethnic groups in Ethiopia have their own indigenous mechanism to deal with conflicts. Reconciliation is inevitable for restoring harmony among a society and making peaceful interaction between those who are at variance. The main objective of this study is to explore the practices and challenges of indigenous conflict resolution mechanisms particularly the “Ze-Wold” in Raya Kobo Town, Ethiopia. The study employs a qualitative research approach with the case study design. To conduct this research the researcher has collected primary data using different tools such as key informant interview, focus group discussion and observation. A total number of 15 informants were participated in the study. The secondary data were collected from published researches from research sites and unpublished government documents from truism office. The collected data were analyzed using thematic analysis method, by using narration, paraphrasing and quoting of the respondent response. The finding of this study revealed that the “ze wold” indigenous conflict resolution institution is the most important mechanism to solve conflict in Raya Kobo town. Ze-wold as an indigenous conflict resolution mechanism is practiced in wide area like school, church and mosque. Elders, families of conflicted groups, duberties/women, religious fathers participate in the reconciliation process. The main challenges to practice ze wold are, fighting during the process, breaking the agreement after the reconciliation, unable to bring the criminal to justice and lack of budget and hall. This study concludes that Ze wold as an indigenous conflict resolution plays a great role in resolving conflicts. This study recommends government/truism office should prepare conducive environment for the reconciliation process and should give awareness about criminal law