The aim of the study was to examine the significance of the indigenous traditional authority institution to conflict prevention and socio-economic development at the local level. The study covered the Majang zone in the Southern West part of Ethiopia. Semi structured questionnaires were designed and administered scientifically to come out with the primary data. Purposively three focus group discussions were also organized in the 14 kebeles to cross check the interviewed data. At the local level, indigenous traditional authorities are the main actor of governance and development. It is therefore essential to recognize them and include them in the formulation and execution of local development policies since to disregard them might lead to development failure. Currently, Ethiopia has adopted federal system of government where power is decentralized at local level but government officials in the country, especially in the study area, come to leading position based on their educational computation. This resulted indigenous traditional authority feel reluctant in actively involving them in different agenda of peace and socio- economic development. This Study have revealed that the segregation of indigenous traditional authority and their people from the development process has frequently led to unresolved conflict, breakdown of societal social interaction and poor project results at the local level. The study also revealed that Indigenous traditional authority has the most acceptances by their communities. They are in tad with their subjects at the grassroots and the societies thus it is anticipated that they should be the champions of their social, political and economic development. It is also important that inclusion of the indigenous traditional authority in political issue of the local community of Majang peoples by giving short and long capacity training to fight poverty and come up sustainable socio economic development.