Abstract: Potato (Solanum tuberosum L.) is one of the most important tuber crops in Ethiopia having the potential of improving the livelihood of smallholder farmers. The majority of the smallholder farmers secure their seed potato from the informal seed system although this system has serious problems related to quality issues. The current study stemmed from the consideration of these issues with the objective of describing the local seed potato system in the context of Northwestern Ethiopia. The findings of the study indicated that the seed potato supplied by this system is of inferior quality in terms of all components of the system. In other words, the seed potato supplied in this system is with sub-optimal production and storage practices, long seed renewal period, physical and genetic impurity, disease infection, small sized and dominated by local cultivars. Therefore, interventions to be made by concerned stakeholders (seed producers, farmers, research, extension, policy makers, etc.) to improve smallholder potato farming system in Northwestern Ethiopia as well as in similar situations need to focus on addressing these factors.