Over the years various studies have been made on the relation between technological investmentsrnand the performance of commercial banks and contradicting results were observed amongrnresearches. The purpose this study is to evaluate capital investment decisions on informationrntechnology and its impact on the performance of private commercial banks in Ethiopia. In orderrnto achieve this objective mixed research approach with qualitative and quantitative methods isrnused on panel data of 6 private commercial banks for period of ten years starting from 2005 torn2014. The relation between dependent and independent variables is analyzed using multiplernregression model by taking banks profitability measure ROA as dependent variable and IT capital,rnlabor, capitalization, market concentration, and inflation as independent variables using OLSrnrandom effect model on Eviews 8. From the study result, except for IT capital the rest ofrnexplanatory variables show statistically significant impact on the ROA. The main variable showsrnthere is positive relation between banks IT investment and profitability but the degree of impactrnmeasured as statistically insignificant. It is also observed that private commercial banks in Ethiopiarnhas low experience of evaluating information technology investments before and after investmentrnis made. In general the research concluded that banks will have better future with morerntechnological advancements, if they are able to make sound information technology relatedrninvestments with good management and IT governance system.rnKey words: IT capital, commercial banks performance, IT impact on performance