With the overthrow of the Derg in 1991, some 500,000 ex-soldiers needed to be demobilized and reintegrated back into their communities. Successfully integrating such a large number of ex-soldiers is clearly important to social stability. While carefully targeted assistance is necessary, conditions in the rural and urban economies at the time of demobilization are also critical to ex-soldiers and the reconstruction of their livelihoods. This paper therefore pays close attention to land tenure and to the urban labour market, and their implications for reintegrating ex-soldiers back into the community. Data from four recent household surveys are used for this purpose. On the basis of the data analysis, the paper concludes that the demobilization and reintegration programmes achieved some success. Ex-soldiers returning to their rural communities did not, by and large, face major problems in gaining access to land. State ownership of land facilitated the reintegration process. However, lack of a land market does pose problems, and tensions over land may increase. Ex-soldiers have below average holdings of livestock (a key asset for rural livelihoods) reflecting difficulties in livestock provision in the reintegration programme. Moreover, ex-soldiers who entered the urban economy encountered a tough labour market and many became unemployed. In summary, young people have few livelihood opportunities in either rural or urban Ethiopia, a situation that must be remedied if social conflict is to be avoided and poverty reduced.