Safety and security are among the major basic needs for the public in daily life and transportation plays a crucial role in satisfying this need. According to the World Health Organization (WHO) data, estimates of 1.2 million people worldwide died as a result of road traffic injuries in 2013 and it is estimated that road traffic injuries will be the 6th leading cause of death by 2030. Among the various types of road traffic injuries, accidents between trains and road vehicles are the deadliest and are associated with high cost of accidents. As Railway transportation continues to be an important piece to the overall national transportation puzzle in Ethiopia and as congestion continues to increase on the nation’s roadways, commuters continue to flock to public transit as an alternative transportation mode. In Addis Ababa Light Rail Transit, there are over 20 level crossings, this represent a significant safety hazard to both road and rail users. In this paper, we used safety demonstration by complete system analysis to carry out safety demonstration for level crossing at Addis Ababa Light Rail Transit, and Failure mode effect analysis was used for identifying the potential hazards associated with the system and their root causes. Hazards associated with Addis Ababa Light Rail Transit level crossing are identified and classified, and results showed that 41% of the hazards are caused by Human errors, technical problems has 32%, non-compliance with standard operating procedures takes 18% and 9% are caused by other factors. Our Failure mode effect analysis result shows that safe redesign of the level crossing, management and operation of level crossings can reduce risks, and frequent orientation of road vehicle users to always give attention to traffic signal in level crossing can reduce the number of fatal and serious incidents and collisions.