After the overthrow of the Derg regime in 1991, Ethiopia established a democratic federal state that gave full recognition to ethnic autonomy within a unitary state. Its new Constitution created ethnic-based territorial units as a reaction to some long-standing historical conflicts. Thus, it provides all the constitutional and democratic principles to each ethnic group that had not before. However, it's a socialist federation that grants the right of secession for each ethnic group. In common with other countries where such federations were introduced, it has created new inter-regional conflicts, aggravated existing conflicts, and endangered state unity. Thus, following this federal experiment, Ethiopia has faced enormous challenges. Therefore, through deploying empirical and qualitative case methods, this study investigated and critically examined the causes, trends, impacts of federalism's design in Ethiopia in general and particularly in the Amhara regional state. In the end, it provides mechanisms of inter-ethnic conflicts.