Change management determines the success and failures of any organization. However, the practices of change management are very poor in most of public sectors and the employees resist change due to bad habits, attitudes, perceptions, and lack of ambitious plans and strategies. The descriptive research design was applied to examine the current practices and challenges of change management in Arsi Negele town municipality. The primary data was collected via questionnaires and interview while the secondary data was collected from various literatures. To realize the objective of the study 67 employees were selected from the municipality using simple random sampling method. This study employed both qualitative and quantitative method of data analysis. The finding of the study revealed the poor change management practices and it became unfamiliar among the employees of municipality. Mainly change management was implemented in order to meet changing customer needs, market demands, respond to both internal and external pressures. Conversely, employee resistance; lack of awareness and knowledge; communication breakdown; lack of employee participation and involvement in change management, failure of conducting force field analysis; lack of well-planned and prolific change management and shortage of funds mainly hindered effective change management in the municipality. Therefore, devising and implementing sound policy and strategy that can improve the implementation of change management, awareness creation, engagement of stakeholders, creation of strong cooperation between employee and top management, developing two-way communications and conducting force field analysis are highly recommended to strengthen the practices of effective change management.