Background: Breast milk substitutes are defined as “any food being marketed or otherwise represented as a partial or total replacement of breast milk, whether or not the purpose fulfilled. To achieve optimal growth, development and health, WHO recommends that infants should be exclusively breastfed for the first six months of life. Objectives: The aim of this study was to assess utilization of BMS and associated factors among lactating mothers living in Bahir Dar town, North West, Ethiopia, Methods: Community based cross-sectional study was conducted to assess utilization of breast milk substitutes and associated factors among lactating mothers with children of 023 months age from May to June/ 2018. Multi stage sampling technique with single population proportion formula was employed to get total sample size of 809. Pre-tested semi-structured questionnaire was used for data collection tools. Data was entered and analyzed using Epi-info 7and SPSS version 23, respectively. P value less than 0.05 was used as cutoff point for bivariate analysis. Results: In this study 69.7% of mothers gave BMS. Level of breast milk substitutes utilization (cow milk, formula milk and cereal based gruel) was found to be 34%, 39.5% and 16.1% respectively. Mode of delivery (AOR=2.74 95 CI: 1.27, 5.91) and getting information about breast milk substitution in the health facility (AOR=3.32 95 CI: 1.75, 6.29) were significantly associated with outcome variable. However, attending ANC, delivery and PNC services in government health center (AOR=0.16 95 CI: 0.08, 0.32) and in the hospital (AOR=0.17 95 CI: 0.07, 0.39) was negatively associated with the outcome variable. Conclusion and Recommendation: The level of breast milk substitute utilization was very high in the studied community. This leads to the decrease in exclusive breast feeding and appropriate complementary feeding practice too. Regional health bureau in collaboration with other stake holders should take measure for the practice of implemented WHO code of Ethics for appropriate breast milk substitute utilization.