Rapid urbanization and population growth in the past few decades has been worsening the water supply and sanitation problems in Ethiopia putting the current water supply deficit of the country at a staggering 41%. Using Ethiopia as a case of rapidly growing countries in the Global South and struggling with water supply and sanitation management, the objective of this study was to examine the challenges of sanitation in Ethiopia by selecting 14 towns located under different climatic conditions and administrative regions with diversified culture, ethnicity, and religion. Data from these towns were collected through household survey, Focus Group Discussion (FGD), Key Informant Interview (KII) and site visits. The field observation was conducted with representatives from the municipality who have knowledge on the existing sanitation and associated problems. Analysis of the collected data shows that poor water supply, inadequate toilet facilities, poor toilet facility emptying practices, poor community perceptions on sanitation management and inadequate emptying services were major challenges associated with sanitation. Moreover, absence of wastewater dumping site, lack of integration among the different components of sanitation, insufficient collaboration among potential stakeholders and gaps between the existing population and sanitation services were the other key challenges of sanitation exacerbated by inadequate financial resources. From the 14 studied towns the average water deficit was found 35%, and the average households with no toilet facilities were 17%. Only about 20% households have flushed toilets and about 5% practiced open defecation. While 42% of the households use vacuum trucks for emptying wastewaters and about 37% of the households dump wastewater outside of their premises. Among the studied 14 towns, only four towns have their own vacuum trucks, no town possesses wastewater dumping site. The different components of sanitation were managed separately without integration. Moreover, the collaboration among the potential stakeholders of sanitation management was found poor and fragmented. Also, sanitation services have not developed along with the population growth as the finance allocated to sanitation management is much lower compared to other municipal services. Thus, sanitation in the studied towns is poor, though there are progresses when compared with previous decades. To improve the sanitation condition in these towns the water supply should be improved together with raising the perception of the local community. The present study recommends further studies to be conducted on the feasibility of sustainable sanitation and "country-wide comprehensive" study on water supply, sanitation and open defecation in Ethiopian in particular and in developing countries as a whole.