Abstract: Dire Dawa is a disputed city over claims of ownership between Oromia and Somalia regional states.Hence, among the Oromo and Somali ethnic groups. However, there was no conflict so far experienced between these ethnic groups in the city of Dire Dawa. The article attempted to study the basic reasons for such peaceful state of affairs in the city. To accomplish this objective, the researcher utilized qualitative research method. Sources of data- primary and secondary sources were used. Primary data as the main source was collected from informants and documents through interviews, observation, focus group discussion, and document analysis. The collected data was analyzed to find common indicators. The study finding revealed that these ethnic groups have developed a sense of belonging to the city of Dire Dawa. They developed a single vocabulary-ye-Dire-lij-. This single vocabulary was the result of cultural dialogue and understanding they developed over century through their interactions. Their interaction was their common cultural heritage which they mobilized to solve their competition over city ownership that avoided outright conflict. This was shown when the two ethnic groups agreed to share the terms of the city Council. This is a lesson that needs to be promoted and shared by others to avoid violent ethnic conflict over claim. It concluded that cultural diversity and intercultural dialogue is one of the surest guarantees of development and peace. The lesson from Dire Dawa provide values needed for economic development: values that are tolerant, trusting, and participatory.