The purpose of this qualitative enquiry is to understand the working group formation trend of Wolaita Sodo University students and to identify the dynamics involved in it. The study was conducted on undergraduate Educational Planning and Management department regular third year students. In this study phenomenological approach was employed. Thus, 65 students that took part in the study were meant to form 13 groups based on their preference. Then data was collected by using participant observation, Focus Group Discussion, and in-depth open-ended interview. The data collected was verified, organized, categorized by themes and analyzed. The study results indicated that ethnic lines and friendship are the basis for students‟ group formation, students‟ participation in group activities is low, and group works have positive impact on students‟ performance. Hence the study recommended: teachers should promote heterogeneous grouping in working assignments, provide training to students on effective member roles in order to maximize a group's success, to introduce peer rating that is used to adjust team grades based on individual contributions to group assignments. Keywords: Group dynamics, Cooperative learning, Social interaction, Group formation.