Community health worker (CHW) performance is influenced by the way in which management arrangements are configured vis-a-vis the community and health services. While low/middle-income contexts are changing, the literature provides few examples of country efforts to strategically modify management arrangements to support evolving CHW roles (e.g. chronic disease care) and operating environments (e.g. urbanization). This paper aims to understand the performance implications of changing from community-based to health centre-based management, on Ethiopia’s Urban Health Extension Professionals (UHEPs), and the tensions/trade-offs associated with the respective arrangements. We conducted semi-structured interviews/focus groups to gather perspectives and preferences from those involved with the transition (13 managers/administrators, 5 facility-based health workers, 20 UHEPs). Using qualitative content analysis, we deductively coded data to four program elements impacted by changed management arrangements and known to affect CHW performance (work scope; community legitimacy; supervision/oversight/ownership; facility linkages) and inductively identified tensions/trade-offs. Community-based management was associated with wider work scope, stronger ownership/regular monitoring, weak technical support, and weak health center linkages, with opposite patterns observed for health center-led management. Practical trade-offs included: heavy UHEP involvement in political/administrative activities under Kebele-based management; resistance to working with UHEPs by facility-based workers; and, health centre capacity constraints in managing UHEPs. Whereas the Ministry of Health/UHEPs favoured health centre-led management to capitalize on UHEPs’ technical skills, Kebele officials were vested in managing UHEPs and argued for community interests over UHEPs’ professional interests; health facility managers/administrators held divided opinions. Management arrangements influence the nature of CHW contributions towards the achievement of health, development, and political goals. Decisions about appropriate management arrangements should align with the nature of CHW roles and consider implementation setting, including urbanization, political decentralization, and relative capacity of managing institutions.