Urbanization in Ethiopia is rapidly reducing green space and biodiversity, and placing ecological stress on trees. Urban street trees (UST) can provide multiple ecosystem services, but need to cope with challenging street ecology and future climate risks. However, UST selection in Ethiopia is poor, and conventional trials and modern breeding are costly and time consuming to apply in Ethiopia. The main objective of the study was to identify potential UST species for two Ethiopian cities; Addis Ababa, and Arba Minch, by studying interspecific differences in functional traits. For the purpose, we created a database with list of 120 candidate UST gathered from multi-stakeholder workshop, literature review, and senior experts survey, and their ecological with their phenological and morphological features. Then we filtered 25 potential UST through framework analysis considering eco-morphological features of the trees. For the 25 species, we measured three types of plant functional traits: conservative traits (leaf mass per area and leaf dry matter content), acquisitive traits (leaf area, specific leaf area and leaf water content) and drought tolerance traits (leaf turgor pressure loss point, and leaf succulence index). Our results showed a strong trade-off between conservative and acquisitive traits, particularly between leaf dry matter content (LDMC) and specific leaf area (SLA) (r = −0.71), consistent with plant economic spectrum theory. Using PCA analysis, we identified three groups of potential USTs (Type I, II and III) that exhibit different adaptation strategies, consistent with Grime’s trait-based classification of universal plant adaptation strategies (CSR). Compared to species with high acquisitive traits (Type II and Type III), Type I species have high conservative and drought-tolerant traits shows better adaptation to harsh road environments, whereas Type II and Type III species may be more advantageous for urban parks and other resource-rich components of urban ecology. We also found significant variation in conservative, acquisitive and drought-tolerant traits among different species, indicating their different adaptation strategies. Our research advances the knowledge of plant adaptation in urban environments and provides a useful method for UST selection.