The study was focused to prepare a management strategy for improving the water supply and sanitation of the town Assela, Ethiopia. The data were gathered through questionnaires, laboratory experiments, and personal observations. 260 households were selected by using a stratified random sampling technique. Data analysis was completed using a statistical package for social science and the pressure head in the distribution system was analyzed using EPANET-2 software. The findings revealed that the average domestic water consumption was 12.8 L/ca.d, which only satisfied 64% of the minimum urban water consumption limit of 20 L/ca.d. About 15.8% of the analyzed nodes were supplied with water at a low-pressure head (<15 m). Most of the physicochemical parameters analyzed exhibited values within acceptable limits, except for residual chlorine. Regarding biological parameters, only 75% and 62.5% of water samples were within the acceptable limits for fecal coliforms and total coliforms, respectively. The sanitation level in the town was only assessed as 66.9%. A management strategy involving a two-phase implementation was suggested to improve treatment and disinfection; extend water supply network; augment water supply and increase all water usage above 20 L/ca.d by 2025 and to 30-60 L/ca.d range before 2035.