Prostitution in Ethiopia was a field of engagement for numerous Ethiopian women since a long ago. Despite its prevalence in somehow a modern/settled manner since the medieval period, it was not legally addressed in an effective manner. For this reason, prostitution is highly blamed to be a source of problems like trafficking in persons, sexually transmitted diseases, violence against occupants of the field, public nuisance, and enhance child prostitution among others. Hence, the research focuses on studying the opportunities and challenges of regulating prostitution and determine the appropriate legal model to address the above problems based on Ethiopian lived realities. To this end, the research adopts qualitative legal research methods. In doing so, international and domestic laws on the subject area and vast literatures on theoretical frameworks of prostitution, approaches of prostitution regulation and recognition, and opportunities and challenges of regulation are consulted. Besides, the researcher also had interviews with some selected Ethiopian Ministry of Health, Ethiopian Ministry of Women and Children, Ethiopian Women Lawyers Association, and Ethiopian Family Guidance Association officials and experts. The main findings of the study are that regulating prostitution have both opportunities and challenges to Ethiopia. As an opportunity, achievement of an improved working conditions for prostitutes, reduction of incidences of human trafficking, avoiding street prostitution and public nuisance, increased income of prostitutes and government’s tax revenue, and control of sexually transmitted diseases and as a challenge, increase cross boarder migration, inevitability of underground sex work, and stigma against prostitutes for it is considered immoral are identified. Nonetheless, the research had indicated in advance that these challenges could be eliminated. Henceforth, migration is identified as it would not be savior in Ethiopia for prostitutes from neighboring countries would not influx in to Ethiopia since they would not have a better economic advantage in Ethiopia and Ethiopia is in a geo political sphere where free flow of labor and goods is restricted. Underground sex work on the other hand could be eliminated through allowing police checkups and imposing responsibility on clients not to purchase cervices from illegal sex workers and public stigma against prostitutes could be done the same through public education. Finally, the study concludes the regulation/legalization model of addressing prostitution is appropriate for Ethiopia compared to criminalization and decriminalization since the latter two are extreme models while regulation is a middle ground. As a result, the research recommends Ethiopia to consider existing legal frameworks so that it could be possible to introduce a comprehensive regulatory framework and to introduce some exit arrangements to allow the sector be occupied only by those engaged voluntarily.