In Ethiopia, many ethnic groups have developed their own conflict resolution mechanisms. The ethnic group of Yem in south-western Ethiopia is one of those with its own conflict resolution mechanism (the Chalo judicial system). The objective of the study was exploring the practice through which the studied community deals with conflicts by using the Chalo judicial system and its implication for peace, security and good governance. A qualitative research design was employed under which, key informants’ interviews, focus group discussion, document analysis and observations were conducted and the data was analyzed qualitatively. The finding of the study revealed that, the Chalo judicial system plays an important role in maintaining the peace and security of the community. The Chalo judicial system has its own execution time, process, and actors involved. Theft and betrayal, inheritance, boundary conflict, and divorce are some of the sorts of conflict that are presented and handled in the Chalo judiciary. Besides, the study revealed that, while it is used to resolve a wide range of conflicts on the ground, it is not adequately recognized by national law and lacks a strong link with the formal court system. Therefore, this research recommend that the members of the community, the woreda culture and tourism office, higher educational institutions, and the government shall collaborate in order to conserve and pass on this sort of indigenous conflict resolution mechanism which upholds community peace and security to future generations. Keywords: Chalo, elders, indigenous conflict resolution, governance, peace, security.