Abstract This study investigated teachers' perceived knowledge and their actual practice in developing jnglish as a Foreign Language (EFL) instructional materials at Debre Markos and Gondar ~ Colleges of Teacher Education. The study answers what teachers perceive about developing EFL instructional materials or modules, and how they develop those materials. This descriptive study involves a total of 20 EFL teacher-developers. Close ended questionnaires and structured interviews were used to gather data from research participants. The reliability coefficient of questionnaire items was calculated with Cronbach Alpha data analysis method and calculated as 0.89 which is reliable. Both quantitative and qualitative methods of data analysis were utilized for questionnaire and interview items respectively. The correlation between teachers' perceived knowledge and their actual practice were andlyzed with Pearson correlation method using SPSS Windows. The findings of the study revealed that though the teacher-developers do not perceive they have adequate knowledge and experience to develop high quality instructional materials, they are still developing their own EFL instructional materials with lots of problems. The results of this study indicated that lack of opportunities such as trainings, workshops, seminars and sharing experiences that help to improve the teachers knowledge of materials development, lack of adequate access to appropriate supplehientary materials from both Internet and library, time and workload, and lack of personal benefits to motivate and embark on materials development are some of the factors which hindered the .teacher-developers in materials development. The Pearson correlation analysis also indicated that there was a positive medium correlation between the teachers' perceived knowledge and their acthal practice in developing EFL instructional materials at ~= 0.404 and P=0.077 at (2-tailed). Most of the teachers perceive their knowledge in materials development is not sufficient, and fail to relate their theoretical knowledge with their actual practice of instructional materials development. The results of this study, therefore, imply that teachers should be equipped with as much access to supplementary mqterials and opportunities as possible to improve their knowledge of materials· development and to develop higher quality instructional materials or modules .