Natural resources such as fish are vital for improving human livelihood and serving as sources of food, income and employment opportunities in Ethiopia. But, its degradation and overexploitation lead to anxiety about the living standards of human beings and other living things. The degradation of these resources, which is caused by the less common participation of all stakeholders in protecting the resources, is the most challenging issue in the country. The objective of this paper is to review fishery production and management and their challenges, the extent of the overexploitation of natural resources, the contributions of collective action in fishery production and management, and fishery collective action challenges in Ethiopia. The review paper identified that the existence of a lack of strong coordination among different actors like local communities, the government, development agents, research centers and donor organizations whose concern are with the fishery sector caused the degradation of water bodies and fishery resources in Ethiopia. These issues resulted in challenges in fishery resource production and management, mismanagement in solving social differences among local communities, and low cooperation among communities in protecting fish resources. Besides, these challenges also caused a limited expansion of fishery collective action, overexploitation of fishery resources, and less concern for the protection of fish diversity species in the country. Therefore, essential policy implications forwarded are creating and improving joint collaboration between fish users, local communities, government institutions and development agents; organizing and empowering the local communities in collective action to involve them in the fishery sector to contribute to practical improvements in the protection, production, management and sustainability of fish resources.