The term "Adama" was pointed to have originated from an Oromo word-"Adaamii". It is a name for tree types called "cactus" in English. According to local people, there were plenty of Adaamii trees in and around old Adama areas. Later, when the settlement moved to the site around the new railway station, the name Adama also came along with the people, since the settlers were the same. Adama, which has been the original name of the town, retained and or remained until it was renamed "Nazareth" by Emperor Haile Selasse in 1944. However, recently after the establishment of Regions during the transitional period, the Oromiya Regional State decided to retain and restate some of the original names of places in the region. As a result, "Adama", the original and historical name that is believed to preserve the interest and history of the Oromo was reinstated.
The emergence of Adama as an important commercial and administrative centre seemed to have coincided with hosts of factors in Ethiopian history. These among others include the rise of Menilik II, the Finfinne— Djibouti railway and the Italian occupation; events which latter could further be expanded into dozens of factors for the evolving of Adama as an important area.
The ascent of Menilik II in the late 19 th century as an heir to Shoan kingdom, and his interest to expand his grip on the East and South had unintentionally contributed for Adama to emerge as a leading centre from among its vicinities. This was followed by such measures as establishing a strong base of the Ethiopian Ground Force at the suburbs of Adama, which in one way or another induced movement of more people to the area and its surroundings.
The opening of Finfinne— Djibouti railway in 1917 was another impetus for the emergence of Adama as an important commercial centre. The beginning of the first settlement of indigenous people to exchange goods and services with the railway workers was the embryo of the process that later brought about the evolution of the area into the focal as an urban area.
Further, the Italian occupation was also another important stimulus for Adama to begin playing substantial economic roles in the area. The Italians not only connected Adama to places of such regional importance as Finfinne, Assela and Diredawa via newly built roads, but also paved ways to join the town by modern communication systems such as telephone, telegraph and radio networks .