The internet, being an integral part of human life, is widely used by university students forrndifferent purposes including academic related works, networking, entertainment and staying uprnto date with latest information. Nevertheless, making use of the internet excessively can bringrnabout negative consequences in the lives of students. The present study sought to determine thernrelationship between internet addiction and psychological wellbeing among main campusrnstudents at Addis Ababa University. Employing a cross sectional research design, quantitativerndata from 304 university students (male = 156, female = 148) with a mean age of 20.76 yearsrn(SD = 1.42) were collected using demographic questionnaire (6 items), Young’s InternetrnAddiction Test (20 items) and Ryff’s Psychological Wellbeing scale (18 items). Descriptivernstatistical methods including frequency, percentage, mean, standard deviation, Pearson productrnmoment correlation and inferential statistical methods such as Independent Samples T test, OnernWay ANOVA, and multiple regression analysis were used to analyze the data. The study foundrnthat 28.2 % of the participants were found to be addicted to the internet. Students who use therninternet for entertainment purpose are more prone to internet addiction compared to studentsrnwho use the internet for academic purposes. A higher level of internet addiction was observedrnamong students who used the internet for more than six hours per day compared to those whornused the internet for two hours and below. Majority (90.1%) of the students’ psychologicalrnwellbeing status was found to be high. Compared to second year students, first and third yearrnstudents had a relatively higher status of psychological wellbeing. Students who use the internetrnfor entertainment purposes reported a lower status of psychological wellbeing compared tornstudents who use the internet for academic purposes. Similarly, spending more than six hoursrnonline per day was also associated with lower status of psychological wellbeing. Bivariaterncorrelation showed that internet addiction and psychological wellbeing had a significant andrnnegative relationship. Furthermore, multiple regression analysis revealed that psychologicalrnwellbeing was significantly and negatively associated with internet addiction, after adjusting forrnpotential confounding factors. Based on the findings, it is safe to conclude that internet addictionrnis a risk factor for lower psychological wellbeing.