Leadership development is crucial for institutions as it directly impacts their effectiveness, accountability, and ability to serve the community. Various internal and external challenges can hinder effective leadership development within institutions in Ethiopia. In line with facts, the article aims to examine the practices and evaluate the challenges of leadership development in Ethiopian public institutions, thereby recommending ways to enhance effective leadership development for the overall effectiveness of these institutions through the review of the latest empirical evidence. Accordingly, the findings of the review indicate that leadership training programs are not demand-driven, and political affiliations heavily influence recruitment processes for leadership positions rather than merit. This undermines the readiness and interest of potential candidates, resulting in the selection of unqualified leaders. Besides, the results also indicate the existence of a fragile institutional framework, deficiencies in the education system, poor coordination among stakeholders, inadequate infrastructure, and insufficient support and mentorship. In most instances, outdated teaching methods that focus on rote memorization rather than creative thinking and innovation are employed. On the positive, there is a growing trend toward self-directed learning, providing a cost-effective means of professional development. To achieve effective leadership development within organizations and mitigate the identified challenges, periodically conducting needs assessments is vital for aligning leadership development with organizational objectives and aspirations. Additionally, selecting appropriate candidates for leadership programs as well as ensuring top management's commitment to providing resources, and integrating leadership development with organizational strategy are essential. Moreover, Ethiopia's leadership development efforts should be culturally contextualized and aligned with the nation's socio-political realities to achieve meaningful results.