Since 1991, Ethiopia has been implementing an ethno-linguistic federal system. This system established nine ethnically based regional states. In this article, I briefl y discuss the moral and legal justifi cation of group (collective) rights of ethnocultural communities and introduces the concept of ethnic federalism in general, and Ethiopian ethnic federalism in particular. I also discuss the literature on issues of group (collective) rights (of ethno-cultural communities) and their place in liberalism. While discussing the historical, moral and philosophical necessities for such federal arrangement, I also point out the most binding constraints Ethiopian federalism is facing.