The main purpose of this study is to assess challenges on implementation of continuous assessment in physical education classes at Belay Zeleke preparatory and Senior Secondary Schools in Bichena Town. The design of the study was descriptive survey research method.2PE Teachers, 2 school principals and students were participants of the study.2 schools were selected purposively while participants were selected by simple random sampling method. To gather data for this study, the researcher used the following instruments. These are questionnaire, interview and observationThe major findings of this study include teachers and students’ perception to continuous assessment was negative. Different assessment techniques were not used to assess students’ achievement. The study also found that large class sizes inadequacy of school infrastructure, lack of manuals, weak follow up support and feedback, system on the implementation of continuous assessment, lack of material and playground in the schools were the major challenges of continuous assessment. The insufficient allotted period and large class size students were also mismatch. For further improvement, continuous on the job training, adequate and updated manuals, support and immediate feedback on the learners' continuous assessment implementation, fulfilment of facilities and materials and also adequate playground were suggested as potential solutions to the proper implementation of continuous assessment.