This article explores the relationship between federalism and conflict in the light of the experience of the federal experiment in contemporary Ethiopia. By reinforcing the truism in federal studies that federalism is not a panacea to the ailments of divided societies that are prone to conflict, it seeks to point out that while federalism, as a reaction to some long-standing historic problems, helps us deal with some conflicts, it also has the potential to generate some other (new) ones. By assuming that conflict is primarily a relation of divergence of interests among parties with diverging strategies and methods, the article describes federalism in general and the federal experiment in Ethiopia and its persistent attempts to deal with the old and new conflicts that emerged in/from the past and are emerging day by day. Throughout, it is argued that we need to understand federalism as a tool of governance that both solves and generates different kinds of conflicts, and that we need to lessen our expectations of the federal experiment (by remembering that it does not establish the ‘peaceable kingdom’ that idealist philosophers long hoped for), and take the modest road of learning to live with the conflicts. Key Words: Conflict, constitution, ethnic diversity, Ethiopia, federalism, states.