Internally Displaced persons (IDPs) face numerous challenges. IDPs appear to demonstrate resilience and utilize fostering strategies to help themselves at individual and community level. However, little is known about this relationship in Ethiopia particularly in this study area. Thus this study aimed at understanding psychosocial challenges and resilience of IDPs. A concurrent explanatory mixed methods design was followed. 5 Key informants &7intervewees 216 IDPS were participants, who were selected by utilizing purposive and available sampling techniques. An adapted form of Conner- Davidson resilience scale, adapted closed ended psychosocial measuring scale and semi-structured interviews were utilized to collect data. Quantitative data were analysed using T- test, ANOVA, Pearson’s correlation and multiple regressions. And qualitative data were analysed thematically. The qualitative analysis revealed that psychosocial challenges particularly psychological, social and economic challenges are common among IDPS, yet the level of the challenges vary depending on their socio-demographic backgrounds. Women, farmers, single headed family, and camp-IDPs experienced more psychosocial challenges than the rest IDPs. The quantitative data also showed that among 216 IDPs, 46.3% were resilient (with mean, M=82.26, SD= 7.08) while 53.7% had lower resilience (with the mean, M=68.15, SD= 4.20). A t-test analysis indicated gender (male & female) & residence (camp & non-comp) brought significant mean differences in resilience measure. A correlation analysis revealed strong positive significant association between resilience and factors where the correlation was strong with social support and cohesion (r=.725, p<.000), religiousness and spirituality (r= .667, p<.000), and psychosocial challenge (r=.518, p<.000). Furthermore, a regression analysis revealed that 64% (adjusted R2=.64) of the variation in resilience scores among IDPs was accounted for the variation in getting social support & cohesion, living with religious beliefs & spirituality, and the ability to cope with psychosocial challenges. It was also found that social support and cohesiveness has greater value in explaining IDPs resilience (Beta=.467 or 46.7%, p<.000), indicating that IDPs social environment and closer relationships were more likely to build resilience among IDPs. The findings highlighted the need for support programs to invest on identifying and nurturing factors that improve IDP resilience for sustainable solutions.