The Ethiopian government has long recognized that rapid population growth is the major challenge in its poverty reduction effort. ILO (2009) noted that from the 1990s, funding for public employment services has been diminishing in many countries, creating new opportunities for private work agencies. The Ethiopian government has promulgated Proclamation No. 632/2009 which governs the practices of Private Employment Agencies in Ethiopia. Accordingly, Ethiopia has ratified the ILO Convention No. 181 on the 21st January; 1999.The research has dealt on the practices and challenges of Private Employment Agencies in Ethiopia by giving special emphasis to migrant workers to Middle East. Therefore, the research work will give a clear insight on Private Employment Agencies and the extent of labor migration to Middle East countries.