Decentralization ultimately involves the execution of most health care activities at lower levels of the health system. However, when poorly implemented, decentralization can create confusion about roles and responsibilities. This study attempted to assess the perception and practice of decentralized decision-making authority of health managers at different levels of the health system of Jimma Zone, Oromia Regional State of Southwest Ethiopia. According to the regional guideline, ensuring achievement of regional health service targets is the responsibility of the RHB. This was clear to 98% (n=99) of the health managers included in this study. However, almost equivalent proportion of the respondents (96%) agreed that the FMOH should be responsible for this. Such confusions were observed in almost every functional area. The in-depth interviews demonstrated that legislative guidelines were not available in most district health offices and facilities. Moreover, because of the prevailing scarcity of human, financial and other resources at zonal and district levels, it is difficult to expedite health sector decentralization in Jimma Zone.