The1998-2008 war between Ethiopia and Eritrea ended following the signing of a Cease fire agreement in June 2000. In December 2000, the two parties signed the Algiers agreement, which led to the establishment of an independent boundary commission to delimit and demarcate the borderline. The commission rendered its delimitation decision in April 2002. The delimitation decision, however, failed to resolve the conflict between the two states due to Ethiopia''s demand for dialogue prior to demarcation and turned the peace process into a political deadlock. Since, the relation between the two countries remain tense as the two states continued to support and host the opposition groups of one another. The Temporary Security Zone that was established as a buffer zone to separate the armies of the two countries has collapsed and the armies of the two countries are faced each other. The situation poses a possibility of another round of violence. This work, principally, studies why the Algiers agreement was not able to resolve the conflict between the two states. It also explores the options available to end the deadlock and normalize relations between the two countries.