Small and Medium enterprises play an important role in the economic development of a country. They help in employment creation revenue generation, self-independence, industrial transformation, and export. The study examines factors determining dynamics of enterprises' transition of small and medium enterprises in Bahir Dar, Amhara region. The general purpose of the study was to identify the status of dynamics of enterprises' transition of small and medium scale enterprises and the major factors that affect it. Given that a survey-based approach was applied And Primary and secondary data were used for this study. The target population was manufacturing sector in small and medium Government organized enterprises in Bahir dar, Amhara region. The choice of the study area was based on size and concentration of SMEs. A sample of 136 organized SMEs has been taken from a total population of 420 and data were collected using questionnaires and interview from 136 SMEs and 5 experts respectively. The selection of respondents was done using stratified random sampling and purposive procedures for enterprises and experts respectively.