Urban youth unemployment has become a worldwide phenomenon in which Ethiopia is not an exception. Hawassa as among major cities of Ethiopia has become a home for many unemployed young people. This article has an overall objective of assessing the socio-economic and psychological risks of unemployed youth in Hawassa city. To address this objective, the article adopted both quantitative and qualitative research methods. A total of 157 unemployed youth were taken as a sample. Moreover, FGDs with unemployed youth and key informant interviews with different government institutions were important data collection tools. The findings reveal that unemployment affects the marital status, dignity, self-esteem, social status, education, and other socio-economic and psychological attributes of young people.