Potato production is an important agricultural activity in the southern Ethiopia. However, the yield of the crop is very low due to a number of constraints among which low soil fertility and poor agronomic practices are few. Therefore, the experiment was conducted to evaluate the effect of nitrogen fertilizer and plant spacing on growth, yield and yield components of potato (Solanum tuberosum L.) at Umbullo Watcho watershed, Southern Region in 2010 cropping season. The experimental treatments; five nitrogen levels (0, 55, 110, 165 and 220 kg N ha-1) as sub plot and three intra- row plant spacing (25, 30 and 35cm) as main plot were laid out in split plot design with three replications. Therefore, the research was carried out with the following objectives: Evaluate the effect of nitrogen fertilizer and /or plant spacing on growth and tuber yield of potato, assess nitrogen fertilizer use efficiency and nutrient recovery by the potato crop and assess the economic benefit of nitrogen fertilizer use.