This paper examines the status of the implementation of continuous assessment (CA) in Mettu University. A random stratified sampling method was used to select 309 students and 29 instructors and purposive method used to select quality assurance and faculty Deans. Questionnaires, focus group discussion, interview and documents were used for data collection. Quantitative data were analyzed in terms of descriptive statistics whereas qualitative data qualitatively. The finding of the study reviled that; instructors considered it as continuous testing, students perceived it as a method of assessment used to increase their academic result. The major challenges were: lack of clear manuals and guidelines, lack of continuous and adequate training, awareness and skills on the part of instructors, large class size, lack of infrastructure and instructional materials, poor communication of staff with concerned bodies. Based on the results recommendations were forwarded.