People who have been internally displaced (IDPs) are a worldwide phenomenon that is alarmingly expanding around the world. This study set out to look into the psychological difficulties and coping strategies that internally displaced individuals and the host community face. A design using mixed methodologies was used. Data, both quantitative and qualitative, were gathered from 238 host communities and 122 IDP respondents. Purposive and basic random samplings were used. Numerous statistical methods, both descriptive and inferential, were used to analyze the data. The test results of one sample t-test sex [t (112) =-2.158, P=.001 for personal depression; t (112) =3.204, P=.001 for personal stress cases; and t (112) =-1.319, P=.190 for personal challenges of anxiety, and the test result of [t(228)=-3.181,p=.001 for personal depression of households, [t(228)=-3.358,p=.001 for personal stress of households, and [t(228)=-3.188,p=.001 for personal challenges of anxiety [t (112) = 3.054, P=.000 emotional depression; t (112) =-2.873, P=.000 emotional stress cases; t (112) =-3.041, P=.000 emotional challenges of anxiety of IDPs; t(228) =-3.358, P=.001 emotional challenges stress of households; and t(228) =-3.188, P=.001 emotional challenges of anxiety of households host community. The result showed that psychosocial challenges were higher in females than men in camp than in the community. The result of one-way ANOVA analysis indicated that (household’s age [F (2,111) =7.895, P =.001 for personal depression, [F (2,111) = 8.725, P =.001 for personal stress, and [F (2,111) = 9,546, P =.000 for personal anxiety within IDPs) and there was a considerable change between age intervals among the host community (household’s age [F (2,227) = 16.919, P =.000 for personal depression, [t (2,227) = 20.026, P =.000 for personal stress, and [F (2,227) =19.623, P =.000 for personal challenges of anxiety household’s marital [F (3,110) =65.505, P =.001 for personal depression, [F (3,110) = 8.335, P =.000 for personal stress, and [F (3,110) = 6.598, P =.000 for personal anxiety within IDPs, and there was substantial variation between marital status among the host community's marital [F (3,226) = 7.170, P =.000 for personal depression, [F (3,226) = 5.568, P =.001 for personal stress, and [F (2,226) = 6.566, P =.000 for personal challenges of anxiety]. As a function of family size, [F(2,111)=12.092, p=.000 for personal depression cases; [F (2,111)=10.265, p=.000 for personal stress; [F (2,111)=7.982, p=.001 for personal anxiety of IDPs personal challenges due to family size; and [F (2,227)= 6.893, p=.001 for personal depression; [F(2.227)= 7.374, p=.001 for personal challenges of stress; [F(2,227)=14.919, p=.000 for personal challenges of host community due to family size]. The result showed that as family size increased, family structure became dysfunctional, and age increased, internally displaced people in IDP camps in Bullen Woreda were highly affected by a lot more psychological and social problems than the host community. The governments at all levels, non-governmental organizations, and individuals should take responsibility for addressing the issues pointed out in this study, such as the psychological distress and social challenges of IDP and the host community.