It is a systematic review of the significance of good governance and problems hampering its implementation in Ethiopia. The concept and issues of governance is linked to human history. Although the styles of governance differ, governance existed since the creation of human beings. In fact, it is obvious for the one group to rule and the others to be ruled. In order to convey this in a worthy manner and satisfy the needs of those to be served, the relation has to justify acceptable standard. In this regard, the government organizations and non-governmental organizations together with all the concerned bodies including the national and international development agencies are involved in the promotion of good governance. The concept of good governance has become more popular in Africa at the finale of the 1980s. Ethiopia had a long experience of governance that ranges from the traditional rule of monarchs to a democratic form of government. Revolution in good governance, by which citizens got the chance of enquiring about their rights, was endorsed by the consent of constitution 1995. Nevertheless, due to the past political influence and even various hitches in the structure of the new government and other reasons, several policies prepared and actions taken could not fully solve the good governance bugs of the country. In preparing this review article, qualitative research techniques were utilized in attempting to critically evaluate the concept of governance and good governance. The data has been collected from various secondary sources with the objective of examining the status of the country in implementing good governance and identifying the major problems facing it. Accordingly, the inhabiting problems specified are: Poverty and illiteracy, low participation of the community, corruption, past political attitudes, lack of adequate skilled and devoted manpower, effects of globalization, conflicts, wrong activists, lack of effective check and balance, interference and etc. Thus, added to the strong commitment of the current reformed government, all stakeholders should work strongly to alleviate the noted problems.