Psychological wellbeing is a crucial concern of the elderly. The aim of this study was to examine whether Selection, Optimization, & Compensation strategy and social support is predicting elders psychological well-being or not. At the same time patterns of Psychological wellbeing across demographic variables was identified. In order to achieve the objective of the study, community based descriptive survey design were used. Data were collected from arbitrarily selected 393 elders (170 males, and 223 females) in Western Shewa Town through questionnaire. As the result of the study revealed, most elders have moderate and below moderate Psychological wellbeing (30.3% & 49.4%), Selection, Optimization, Compensation strategy (31.6%, &47.7%) and social support(41.5% &37.7%) respectively. Also the result of the study indicated that Psychological well-being was significantly and positively correlated with social support (r=.977, P<.01), SOC (r=.980, P<.01), income (r=.772, P<.01) and educational level (r= .687, p<0.01) while, age were significantly & negatively correlated to psychological wellbeing of elderly (r=-.421, P<.01).As of the t-test showed there is significant gender difference between Male (mean=136.72, SD=49.29) and female (M=92.41, SD=42.83), total (393), (t=9.52,P=.000 (two-tailed), P<.05) in experiencing Psychological wellbeing. On other hand, Oneway ANOVA indicated that there is significant psychological well being (F=42.451,P=000) difference among elder’s age categories(young, old and old old age) elder. The Scheffe post hoc tests also showed that there was a significant mean difference between elder’s ages categories which implies young elderly had more psychological wellbeing than those were advanced in age. To promote psychological wellbeing of elderly, it was suggested that responsible organizations should establish different programs and activities that promote psychological well beings of elder.