This study aims to assess the practice of institutional autonomy at Jimma University in Ethiopia. The study employed a mixed approach by collecting research data through a questionnaire, semi-structured interview, and document analysis. Two hundred and thirty-two randomly selected instructors and academic leaders were contacted through the questionnaire, and nine purposively selected informants were interviewed. The quantitative data were analyzed by using mean values, standard deviations, and independent sample t-tests, while the qualitative data were examined by identifying common codes and emerging themes. The findings indicated that organizational, academic, and financial autonomy practices were lower than formal autonomy. On the other hand, staff autonomy was relatively at a medium level, and the overall practice of institutional autonomy at Jimma University was poor. Thus, living autonomy was found to be different from formal autonomy. The study also found that the influence of the internal and external environment might contribute to the divergence. As a result, legal provisions could not guarantee the university's living autonomy, but the relationship between the environment and the university does. Therefore, in exercising university autonomy, educational leaders and managers should take the interface between the university and its environment into account.