The purpose of this study was to assess the practice and challenges of distance education by taking Bahir Dar University as a case. In this study the practice of distance education was seen in terms of tutorial program, student support service, assessment and feedback. In order to meet the objectives of the study, a descriptive survey design was employed which is appropriate to gather a large variety of data within the same time frame. Mixed-research method was also used. Both primary as well as secondary sources of data were used in the study. Three different but complementary data collection instruments such as questionnaire, interviews and document review were used for the purpose of collecting relevant data. Distance learners were selected through availability sampling technique. Whereas, semi structured interview participants (coordinator, director and vice director) were selected based on purposive sampling techniques and tutors were selected by using available sampling technique. Accordingly, a total of 110 respondents i.e. 100 distance learners, 7 tutors, 1 director, 1 vice director and 1 coordinator of the center were participated in the study. The data collected through questionnaires were analyzed quantitatively through frequencies, percentages, mean, standard deviation and one sample t-test were used. Qualitative data were analyzed by explanation as well as in narrative forms. The study found out that the practice of distance education at Bahir Dar University is below the expected standards (for instance: student support system is not available; the tutorial program has several weaknesses; only summative assessment is used for all courses to assess learners’ capacities; distance leaners do not get any feedback on their assessment results). The study has also identified several challenges of the program (institutional, student related and situational challenges). Unless serious measures are taken by the university and if the current practices continued, the overall quality of the program as well as the quality of graduates will deteriorate. Based on the findings of the study, some recommendations are also forwarded.