Banks are the most crucial financial intermediaries in the economy and economy that havernprofitable banking industry are better able to withstand negative shock and contribute to thernstability of the whole economy. The purpose of this study is to investigate determinants ofrncommercial banks profitability in Ethiopia by using panel data of eight commercial banks fromrnyear 2002 to 2013. The study used mixed research approach and secondary financial data arernanalyzed by using multiple linear regressions models for the bank profitability measure, Returnrnon Asset (ROA). Fixed effect regression model was applied to investigate the impact of bank size,rncapital adequacy, liquidity risk, operating efficiency, management efficiency, employeernefficiency, funding cost, banking sector development, real GDP, inflation rate and foreignrnexchange rate on Return on Asset (ROA) and also primary data was used to support the result ofrnthe documentary analyses. The findings of the study show that bank size, capital adequacy andrngross domestic product have statistically significant and positive relationship with bankâ€™srnprofitability. On the other hand, variables like liquidity risk, operational efficiency, funding costrnand banking sector development have a negative and statistically significant relationship withrnbanksâ€™ profitability. However, the relationship for Management efficiency, employee efficiency,rnInflation and foreign exchange rate is found to be statistically insignificant. The study suggestsrnthat focusing and reengineering the banks alongside the key internal drivers could enhance thernprofitability as well as the performance of the commercial banks in Ethiopia.rnKey words: profitability, commercial bank