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Improved rural-urban linkage is a vehicle for balanced socio-economic development of both rural and urban areas. However,in many developing countries, markets across rural and urban space may be integrated only partially, and in extreme cases. There is a significant variation observed in the study areas in the status of production and resource endowment of farm households.The general pattern of rural-urban linkages between towns and hinterlands in the study areas is market attendance though there are variations due to the productivity difference between the two areas.In both study areas there is relatively better backward production linkage that involves the supply of various agricultural products for the urban households in the towns. There is little or no forward production linkage in the study areas.As far as public service is concerned, since the two towns are at the same status as a woreda capital,people in the hinterlands utilize administrative,health and education servicesthough there are variations in the quality and quantity of the service provided.