In this paper, I will analyse a case of ethnic transformation in post-1991 Ethiopia based on an ethnographic study of the Eastern Gurage. The case represents an ethnic setting where the conventional conceptualization of ethnicity in terms of a notion of origin undermines the diversities expressed in various forms of category and boundary formations. The ethnic setting does not also fall into, but combines, the commonplace dichotomization of primordialist versus constructivist notion of ethnicity. Not only by taking Barth’s (1969) formalist anthropological conception of ethnicity as boundary formation, but also suggesting my own analytical distinction, I will attempt to account for the various forms of ethnicities particularly those based on clanship, locality, Islam and state’s categorization. In this regard, I have introduced a distinction between the concepts of identity and belonging in order to explain the different forms of social and political classifications, ideologies and power relationships that are often treated as implying a single phenomenon, i.e. identity formation.