Abstract: The Chittagong Hill Tracts (CHT), situated to the southeastern part of Bangladesh has been under boil since mid seventies. A two decades long conflicts between the Government of Bangladesh and ‘Shanti Bahini`, a rebel group of indigenous people, caused loss of thousands of lives and valuable resources. A peace treaty was signed between the two parties in December 2 1997, in order to bring peace and stability in this region. In this paper, we have tried to highlight the political situation of the country and of the CHT area that resulted because of the treaty. Some important provisions of the treaty have been mentioned and their implementation status has been discussed. It was found that after more than six years of the signing of the treaty, very little of the treaty has been implemented and the situation of CHT is far from peaceful. We have discussed the reasons why maintaining peace in this area is important for Bangladesh and have provided some recommendations that would help in bringing lasting peace in the CHT region.