This study was conducted to examine factors that affect credit risk of Ethiopian Private commercial banks. To achieve its intended objective, this study employed explanatory research design. Non-performing loans was used as Credit risk measure. To this end, the researcher selected 8 private commercial banks in Ethiopia that were established before the year 2011 as to which subjects best fits the criteria of the study. The study adopted an explanatory design. The study used secondary sources of data, which is panel data in nature, over the period 2011-2020. These data was collected from NBE, 2020 report. Ordinary Least Square regression for panel data was adopted to analyze the data. Fixed effect model was appropriate to examine the determinants of credit risk. The assumptions needed to be fulfilled for OLS were tested and the model was found fit for the purpose. Results using fixed effect panel regression exhibited that, return on equity and management efficiency have positive and statistically significant effect on credit risk of private commercial banks in Ethiopia while gross domestic product, loan to deposit ratio and lending rate has a negative and significant influence on credit risk. Based on the findings, the study suggests that banks should strive to improve their Capital level via mobilizing funds by issuing more shares to the new and existing shareholders since highly capitalized banks are more comfortably situated in absorbing more losses.