This study investigated Grade Five students‘ conceptual understanding of fraction addition and examined the contribution of Realistic Mathematics Education (RME) to improving that understanding. The study was motivated by students‘ persistent difficulties in learning fraction addition, including misconceptions related to fraction meaning, equivalent fractions, unlike denominators, and mixed numbers. A Design-Based Research (DBR) approach was employed to develop a local instructional theory and design principles for teaching fraction addition through RME. The study was conducted with Grade Five students at Waliya primary school in Debark town. Data were collected through document analysis of students‘ written work, pre-tests, post-tests, and interviews. The intervention was implemented in two iterative design cycles using RME-based instructional activities that incorporated meaningful real-life contexts, area models, number lines, guided questioning, and collaborative classroom discussions. The findings revealed that students initially demonstrated limited conceptual understanding of fractions and relied mainly on procedural approaches. Common misconceptions included whole-number bias, difficulties with equivalent fractions, and challenges in representing fractions using visual models. Following the intervention, students showed notable improvement in their conceptual understanding of fraction addition. They were able to use visual representations more effectively, explain their reasoning, apply multiple solution strategies, and connect mathematical ideas to real-life situations. Improvements were also observed in students‘ participation, confidence, and mathematical communication. The study concludes that RME is an effective approach for enhancing students‘ conceptual understanding of fraction addition. The resulting local instructional theory and design principles provide practical guidance for improving the teaching and learning of fractions in primary mathematics classrooms. Keywords: Fraction Addition, Conceptual Understanding, Realistic Mathematics Education, Design-Based Research, Local Instructional Theory, Primary Mathematics Education