In the early decades of post-colonial times, the relationship between African states and South Korea was minimal as many African states at that time honed relations primarily with the Soviet Union mainly because they were robustly supported by the then communist countries in the struggle against colonialism. But things have changed as of recent. For the past two decades, South Korea and Africa have been increasingly recognizing each other as viable diplomatic and economic partners. Economic cooperation with South Korea particularly through investment and trade benefitted Ethiopia in terms of job creation, entrepreneurship, technology transfer and improvement of the livelihoods of the people. This, in turn, created a better investment environment and opened up the Ethiopian market for South Korean products. However, the Ethiopia-South Korea economic relationship must come to terms with various challenges. In this regard, this paper investigates the Ethiopia-South Korea economic relationship and provides policy suggestions for economic development of the two countries.