This research was conducted in two Rural Kebele centers of Bahir Dar Zuria woreda, West Goojam, Amhara Region. Bahir Dar zuria woreda was selected based on the prior knowledge and experience of the researcher in that area. The objective of the research was to evaluate the land allocation and compensation procedure in Gonbat and Yinessa kebele. The two kebeles were selected from the woreda because they were the first in preparing the kebele center land use plan and the land was also made ready for allocation. The number of households in Gonbat and Yinessa Kebele Centers were 446 and 658 respectively. From this population a total of 293 sample households were used for the study. The sample land holders were systematically selected from the household list. The data collecting methods such as Questionnaires; interview, focus group discussion, and observation checklists were used because the research was mixed i.e. both quantitative and qualitative and the data were analyzed using descriptive statistics. In addition to this Strength, weakness, opportunity and Threat analysis was also employed to summarize the general status of the land allocation and compensation. Data analysis result showed that land holders in the kebele centers were having positive attitude towards the objective of the kebele centers and the land allocation was fairly distributed by lottery method where 96.2% of the sample has been satisfied. However, the land compensation procedure was accompanied by a number of complains and problems. More than 45% of the sample HHs dissatisfied both in the land to land and monetary compensation. And the majority of the farmers’ compensation preference was land to land exchange than monetary. The landless youth groups have also been benefitted in the land allocation process as because they were able to obtain land freely from their family land holding without compensation payment . And others were able to obtain land by monetary compensation. However those who belonged to a family that have enough land or money have remained landless and there was no legal procedure that entertain this problem. When looking at the strength of institutional arrangement of the kebele and woreda land administration, its efficiency was hampered by lack of human resource, material & organizational problems. In order to resolve all these problems and come up with appropriate solution the regional land administration Bureau has to conduct action research and the result should be used as an input for revising relevant rules and procedures in the land allocation and compensation process. Key words: Land Allocation, Compensation, Land exchange, Kebele Center.