Interest free banking is among the fastest developing business over the globe and become an important part of the financial system in many countries. It is a system of banking or banking activity that is consistent with Islamic law (Shariah) and guided by Islamic economics. In Ethiopia interest free banking has started since 2013. The main aim of this study was to examine determinants of financial performance of interest free banking service of selected Commercial banks in Ethiopia. To achieve this objective the study used 6 years balanced panel data of four purposely selected commercial banks which are the pioneer in starting IFB service and which separately recorded data from the year 2015/16 to 2020/21. The study used secondary data that collected from annual report of banks, national bank of Ethiopia and IFB department. In addition, quantitative research approach and explanatory research design were employed in the study. Fixed effect regression model was adopted in the study and the data was regressed by using Stata software. Thus, the result of the study indicated that liquidity has positive and significant impact on the financial performance of interest free banking service of selected commercial banks in Ethiopia. However, the remaining variables deposit mobilization, operating efficiency, bank size, management efficiency and GDP did not show a statistically significant relationship with financial performance of selected banks. Finally, the researcher recommended that interest free banking service of these commercial banks should emphasize or give more attention to the liquidity of the banks so as to improve their profitability.