This research aims (1) to study the practice of an Integrated Regional Development Policy Formulation (IRDPF) in Ethiopia and (2) to explore and identify the challenges of integrated regional development policy formulation in Ethiopia. The research is conducted by collecting data from 20 purposely selected key informants from both the federal and regional government sectors, political parties and community in Ethiopia. Data are collected through in-depth interviews and review of relevant documents, and systematically analyzed using content analysis technique. The results show that the practice of policymaking and IRDPF process in particular is not in line with of the law of land, in which the executive branch, particularly, the Prime Minister and ruling party’s elites are the key actor in the process at both federal and regional levels with limited consultation and participation of other House of Peoples Representatives, federal and regional policy makers, and other stakeholders. The study also identified various political, social, economic and technical challenges that affect sound and effective integrated regional development policy formulation in the country.