The purpose of this study was to investigate the practices and challenges of leadership in Colleges of Teacher Education (CTE) in Oromia Regional State. The study particularly, investigated the extent to which the CTE leaders are engaged in the leadership practices identified by Kouzes and Posner’s to improve quality of education and institutional performances. To accomplish this purpose, the study employed a descriptive survey method. Both quantitative and qualitative methods were employed. 164 teachereducators were selected from the six CTEs using random sampling technique. In addition, all Deans of the six CTEs were included purposively. Kouzes and Posner’s Leadership Practice Inventory Questionnaire (Observer) was used to collect quantitative data. Interview was also conducted to substantiate the data gained through the questionnaire. Frequency, percentage, mean and Standard deviation were utilized to analyze the quantitative data. The qualitative data obtained through interview were thematized and analyzed qualitatively. The results of the study revealed that the leaders of the CTEs moderately practices the five Kouzes and Posner’s transformational leadership and the leadership practices were found to be ineffective. Moreover, lack of effective leadership, lack of leadership training and experience, failure to challenge the status quo, failure to motivate, empower and enlist staffs in designing and implementing common goals, shortage of budget, and inadequate skill of communicating a shared vision hindered proper implementation of the training processes. Therefore, it is recommended that there should be leadership development strategy to develop leadership skills on the part of CTEs leaders through seminars, workshops and trainings on the practices of effective leadership outlined in this study. Moreover, it is advisable if the concerned body of establish professional developments schemes so that the leaders will improve their skills continuously.