In Ethiopia hot pepper is one of the important vegetable crops produced for home consumption, local markets and international markets. The price of hot pepper in both green pod and dry pod was being increased due to various factors. Selection of best variety for green pod and also for dry pod purpose is mandatory before production. Hence, participatory variety selection was conducted at Halaba and Negelle Arsi districts of the Southern Ethiopia during 2020/2021 cropping season. Five varieties (Melka Oli, Melka Awaze, Melka Shote, Melka Zala, and Melka Dera) were evaluated for green pod purpose and four varieties Melka Awaze, Melka Shote, Melka Zala, Mareko Fana, and local variety were used for dry pod evaluation purpose at both sites. The Researchers` data and farmers preferences toward the varieties were collected and analyzed using SAS software and pair wise ranking, respectively. From the farmers` evaluation results Melka Dera followed by Melka Shote selected for green pod and Mareko Fana for dry pod purpose. Researchers` evaluation results also showed that Mareko Fana was higher in yield and yield components as compared to other varieties evaluated for dry pod purpose. Therefore, based on the results obtained it is better and recommended to produce Melka Dera and Melka Shote for green pod and Mareko Fana for dry pod for the farmers of Halaba and Negelle Arsi districts and other similar agro-ecologies. However, for comprehensive results the participatory variety evaluation should be repeated using irrigation and all possible hot pepper varieties for both green pod and dry pod purposes.