This is a study on discourse as medium of knowledge. Informal education is a system of transmission of knowledge by transmission of discourse people live by. In the humanities and social sciences, the term discourse describes a formal way of thinking that can be expressed through language. Discourses are seen to affect our views on all things; it is not possible to avoid discourse. Discourses is a way of representing aspects of the world--the processes, relations and structures of the material world, the mental world of thoughts, feelings, beliefs, and the social world. Like elsewhere, in the traditional Ethiopian cultures, there are many social practices that govern conscience. There are many rules of thumb that people agree to govern their lives with. Different discourses from various social practices in the traditional Ethiopian community that are transmitted through oral discourse were taken for analysis. The result of the study shows that knowledge through informal education is transmitted through discourse. Discourse has become both the means and the end of knowledge and its transmission. Discourse is shaped by many factors such as culture, language, participant, and history. It, in turn, shapes them back. Discourse shapes and reshapes the thought and practice of the speech community who owns it. It is a replicator, re-constructer and preserver of social change. Discourse facilitates specific changes. It is an agent of social change. Social changes are changes in discourse. Discourses are reinforced by existing systems of education and the media. There is no place to stand outside such systems. Discourse takes the role of building, producing, accumulating, reinforcing, constructing, resisting, legitimizing, criticizing and transmitting knowledge. Informal education is all about learning community discourse. In the discourse is embedded the society's cultural performances, beliefs, social practices, norms, rituals, and social rules required for continued existence. Hence, discourse plays the role of mediating knowledge transmission.