The objective of the research is to investigate factors that affect the implementation of industry extension to MSEsin Bahir dar city.The study employed a descriptive research design to achieve the objective. The target population under the study was the 825 MSEs in manufacturing, construction and urban agriculture sectors, 107 Bahir dar TVET trainers and 27 heads and experts of (TVEDO ,Bahir dar poly technic college deans ,machine lease company, ACSI) The study used a questioner, interview and observation to collect the required data from a sample of 282 respondent. The data collected was coded, quantified and analyzed quantitatively and the qualitative data obtained from Interview and observations were analyzed using descriptive narrations and summarization. Quantitative data was analyzed by SPSS version 20. The study conclude that the stake holder involvement and industry extension support are the key factors affecting the implementation of industry extension service for MSEs found in Bahir dar city. The other key factors were trainer competency and awareness creation towards IES and the factors are positively correlate to each other.The study recommended that there should be a schedule follow up and support by the college deans and department heads about the implementation of IES, The stake holders (the ACSI and machine lease),TVET College and TVEDO need to plan ,work and all the support institution should create integration by rules and regulation & more innovative guarantee schemes should be designed to support MSEs.