The EPRDF, the ruling party since 1991, adopted federalism as an appropriate political system that could be used as an instrument of managing the complex ethno-linguistic diversity and reducing the violent conflicts. Despite the adoption of federalism, ethnic politics is a critical challenge as Ethiopia continues to be worn out from within by frequent violent conflicts and shows a conspicuous symptom of nation failure and dysfunction. This situation reinstates a growing fear that Ethiopia’s conflict-carrying capacity is getting overwhelmed by a superfluity of violent conflicts. Currently, the conflict-carrying capacity of Ethiopia is unable to regulate intense conflicts without loss of system integrity, in which there are several episodes with extensive human rights violations, total breakdown of political orders and transgression of justice. Therefore, the objective of this paper is dealing with the major challenges of ethnic politics in the EPRDF nation-building project.