This study is primarily aimed at determining important demographic and socio-economic factors influencing unemployment in Addis Ababa. Cross sectional data were collected from 539 households through systematic multistage sampling technique in which those members of the household aged 10 years and above were eligible for the study. The structured questionnaire and in-depth interview of key informants were used to collect the data. Univariate, bivariate and multivariate analyses were made. The result has indicated that 57.4% of the sample population was employed while 42.6% were currently not working. Among those currently not working sample populations, 59% were available for work while 41% were not available to work (economically inactive). Hence, unemployment rate was found to be 30.01% and a considerable variation was observed between male and female. Male unemployment rate was 21.72% while that of female was 37.54%. There were strong association between unemployment and sex, age, marital status, migration status, relationship with the head of the household, educational level and household income. Finally, the study calls for the government and other private organizations for program intervention addressing the key factors that influence unemployment in the city. Improving internship and related programs aiming at assisting, empowering, developing and preparing the recent matriculates who could not join Colleges or Universities, for formal labour market jobs as well as self employment activities; promoting the development of micro enterprises along with provision of micro-loans for the purpose of expanding self employment by giving special attention to youth and households with low level of income; as female members of the households are more vulnerable to unemployment, efforts made by the government and other organizations to empower women should be further enhanced through education, skill building and micro-enterprise development.