The quest for creation of new woreda administrative structure is increasing currently in south Gondar Administrative Zone. This study is aimed to explore the challenges and implication of the newly established Guna Woreda by splitting Farta in South Gondar Administrative Zone, Amhara region. To address this objective of the study, the researcher has employed mixed research approach with descriptive design. Both primary and secondary data were used. The sources of the primary data were questionnaire filled by 242 sample households, interview and focus groups discussion. Secondary source include published and unpublished documents, agenda and other related materials. The finding of the study reveals that the major challenges of Guna district are, demarcation problem, shortage of finance, ineffective administration, andweaken social bond, in Farta also decrease revenue and loss of Guna Mountain are challenges. The major causes for the establishment of Guna woreda are, need for better security, the need for infrastructure, need for quick woreda service, need for job opportunity, the need to take easily kebele issues to woreda and population number. The data taken from Legal Advisory for President of Amhara Regional State thatGuna woreda is established by the demand of the people rather than the plan of the government to promote public participation and development, which the split was carried out by assigned committee by the regional government. The finding of the study reveals that the legal frameworks do not indicate ways of consulting andparticipation of the local people regarding the practice ofcreating and splitting new local governments and demarcation.As per the findings ofthe study, the establishment of Guna woreda is not that mucheffective to service deliveryregading to the expected implication and public