This study estimates technical efficiency and identifies inefficiency facial's of smallholder farmers in fourrnselected areas in Ethiopia using Ethiopian rural household survey date of 2004. The study classifiedrnfarmers by their region and selected four villages to estimate their technical efficiency levels. The paperrnemployed stochastic frontier production function to estimate parameters of the frontier function and therninefficiency scores simultaneously using Maximum Likelihood estimation. The empirical results indicaternthat technical inefficiency characterizing cereal production using transom production. function bitter fitsrnthe data from all villages used in this study. Empirical evidence show that the mean technical efficiencyrnranged from 0.53 to 0,74. An examination of the relationship between technical efficiency and variousrnsocioeconomic and institutional variables revealed that formal education, access to credit. number ofrnlivestock owned. off-farm income. age and sex of household head and family size were found 10 bernimportant factors explaining technical efficiency of cereal production in the study villages. However, thernimportance of these variables in explaining technical efficiency differs across villages. The resultsrnsuggested that any attempt 10 improve technical efficiency of farmers should give due attention to thesernfactors and the difference among villages in terms of ecology and institutional factors need to bernconsidered both in an effort 10 improve efficiency of utilizing the available resources and developingrnimproved technologies in the long run.rnKey words: Technical efficiency. stochastic frontier' transom production function. EthiopiarnJEL Classification: C2 1, C24, Q 12, Q 14..