This paper attempts to examine the cost and alternative profit x-efficiency level and thernfactors that may influence the x-efficiency level of the private commercial banks inrnEthiopia, by employing stochastic frontier approach. The data is obtained from auditedrnfinancial statement of six private commercial banks between year 2000 and 2005, variousrnNBE annual reports and interviewing different private bank officials.rnThe study employed stochastic frontier approach using translog functional form, which isrncommonly used in similar studies to represent the data. The study found that the meanrnlevel of cost and alternative profit x-efficiency of private commercial banks were 81rnpercent and 70 percent respectively. This indicates that private commercial banksrnincurred approximately 19 percent more cost than necessary and lost approximately 30rnpercent of their potential profits with in the sample period due to x-efficiency. Thisrnimplies that there exists an immense room for improvement in cost and alternative profitrnx-inefficiency of private commercial banks with out employing additional resources.rnThe study also revealed that the effect of operational specific variables, market specificrnvariables, macro variables and risk variable were plausible in explaining predicted costrnand alternative profit x-inefficiency. Any policy implication designed by the banksrnmanagement and policy makers to improve the efficiency level of the private commercialrnbanks should consider the impact of those influencing factors .