This study focused on role of Ethiopian economic diplomacy in the implementation of integrated housing development program and real estate development. Besides, the paper explores the contribution of housing on the economic, political and social life of the society. Then it assessed the challenges of housing development in Addis Ababa. Thus, qualitative research method and semi structured in-depth interview was conducted. Addis Ababa is selected as a case study because the housing crisis is acute. The thesis found colossal number of houses are constructed and transferred to the society which has direct economic, political and social effect to the beneficiaries, contractures, consultants, MSE’s, suppliers and others. The paper uncovers Addis Ababa housing sector had shortcomings of not utilizing technology, financial scarcity and maladministration. Moreover, Ethiopian economic diplomacy had a strategic advantage for affordable housing in getting the specified amount of materials and quality at reasonable cost directly from producers. The study concluded that the prospects and challenges of Addis Ababa housing exude from the socialist oriented government decrees, policy and procedures. Ethiopian economic diplomacy is imperative motor for housing development in Addis Ababa. The recommendation for Addis Ababa City Administration was to curb its internal maladministration problem and prepare pragmatic policies that proliferate formal housing. Finally, Ethiopian economic diplomats and joint task force shall vigorously pursuit options for housing development by breaking bureaucratic red tapes, showing gaps of housing, attraction of mega manufacturing firms, tycoon housing developers, soliciting technical and financial aid.