The main objective of this study is to examine the effect of bank-specific, industry specificrnand macroeconomic determinants of Ethiopian commercial banking industryrnProfitability from the period 2000 - 2011. By using OLS estimation method to measure thernEffect of internal and external determinants on profitability interims of average return onrnAsset and net interest margin. The estimation results show that profitability persists inrnSome extent, implies that the indicator of the existence of relatively fairly competitivernMarket in Ethiopian commercial banking environment, especially competition betweenrnPrivate Banks. Regarding the explanatory variables, all bank-specific determinants, withrnThe exception of bank size, expense management and credit risk, affect bank profitabilityrnSignificantly and positively in the anticipated way. However, bank size, expensernManagement and credit risk affect the commercial banks profitability significantly andrnNegeatively. 1n addition to this, no evidence is found in support of the presence of marketrnConcentration. Finally, from macroeconomic determinants GDP has positive andrnSignificant effect on both asset return and interest margin of the bank. But interest raternPolicy has significant and positive effect only on interest margin.rnthe commercial banks of Ethiopia policy makers and managers should give highrnConcern to the credit risk management, expense management and large bank sizernmanagement in order to reduce the hindrance of the profitability of the banks.