The major modes of public transportation in the city are Anbessa bus and Minibus taxis. In addition, Alliance bus, Higer midi-bus and Salon taxi are serving the city. These providers are hardly able to cope with public’s demand for transportation. Thus, residents of Addis Ababa have to face great inconveniences, as well as additional costs to the daily trips to their destinations. This study attempts to identify the major factors that contribute to the high demand for public transport system in the city. This study uses descriptive research method. Hence, it mainly relies on secondary data, whereas primary data used as supplementary. The increasing population size and physical expansion of Addis Ababa largely contributes to the demand for public transport. Social and economic purpose trips also contribute to the demand for public transport in the city. However, the existing public transportation system could not satisfy the demand. Moreover, the insufficient finance for investment by the government and the limited participation of the private sector in the service has also contributed for deficiency of transport supply in the city.