Ethiopia is among nations with underdeveloped health situation in the world. The main reason for this problem is the backward socio-economic development. To alleviate this, the country has implemented a multi-sectoral Plan for Accelerated and Sustained Development to End Poverty (PASDEP). Health Sector Development Program (HSDP) has been implemented accordingly since 1997/8. In all these, the issue of health information is important because it is the foundation for better health, as the glue holding the health system together, and as the oil keeping the health system running. This study focuses on the routine health data that passes through the health management information system (HMIS), and the use of this data locally in health facilities. The objective of this study is to assess the level and nature of local data use in the two government specialized referral hospitals in Addis Ababa, and to identify challenges related to local data use in these facilities. The methodology applied in this research was both qualitative and quantitative research methods. The qualitative tools used were interview and document analysis, where as questionnaire was used as a quantitative tool.