In the current study, I examine the alternations that the velar fricatives of Tera [k g x ɣ ŋg] undergo focusing on phonological and morpho-phonological conditioned alternations. Secondary data was used in the study and also my intuition as a native speaker of Tera. Phonologically conditioned alternations showed that the velar phonemes of Tera undergo labialization and the labialized forms [kw gw xw ɣw ŋgw] are realized as a result. These are however not allophones of the velar phonemes as minimal pairs can be found for all the velar phonemes and labialized velar phonemes, for instance, /g/ in gari [ɡari] ‘overripe’ and /gw/ in gwari [ɡwari] ‘to grow’. Thus, they are considered separate phonemes. For morpho-phonologically conditioned alternations, labialized velar phonemes are not realized differently by their environment in compound words. In definite plurals, the velar phoneme [k] in plurals alternates with the labialized velar phoneme [kw] in definite plurals.