Due to the country’s expanding population, inadequate urban water management practices, limited community knowledge of water management, and urbanization, urban water management in Ethiopia is of great importance to the administration of the country. This study draws on a qualitative and quantitative research approach to evaluate the available water supply resources and management techniques in three Ethiopian metropolitan districts, factor in the sustainability of the urban water supply services, and then recommend a workable plan for a sustainable urban water management system. Open-ended and semi-structured questionnaires were used to interview urban water utility officials to reveal important information on water demand management and current water supply services. Documented secondary data analysis and field observations are also used to identify the existing problem in order to draw future suggestions. The findings of this study indicate that some of the common issues with urban water supply systems in towns include outdated water supply infrastructures, rapid population growth and corresponding water demand, high water losses in the distribution system, poor water management practices, and a lack of appropriate institutional framework. The assessments of the three study regions demonstrate that while the percentage of water supply coverage hasn’t changed significantly over the previous 10 years, both the number of customers and the overall population growth have increased by nearly 50%. In order to address this, the Ethiopian government would need to put up a lot of effort into developing water use policies and raising consumer understanding of water demand management techniques.