Background: Adequate nutrition is essential in early childhood. However, child under-nutrition remains a widespread problem around the globe. Improving child nutrition and empowering women are two important and closely connected development goals. These two interconnected goals will affect one another through different mechanisms, and the net effect may not necessarily be positive. Yet, the impact of maternal employment, one method of empowering mothers, on children's nutritional is not well studied in Ethiopia. Objective: To compare the prevalence of under-nutrition and its associated factors among 6-23 months old children of employed and unemployed mothers in urban settings of Dera district, Northwest Ethiopia, 2022. Methods: A community-based comparative cross-sectional study design was conducted among 356 employed and 356 unemployed mothers having 6-23 months old children in Dera district towns. A systematic random sampling technique was used to select study participants. Epi-data version 3.1 and SPSS version 25.0 statistical software were used for data entry and analysis, respectively. Both bi-variable and multivariable binary logistic regression was done to assess the association between independent and dependent variables. A p-value of less than 0.05 in a multivariable binary logistic regression was declared as the level of statistical significance. Result: Compared to children of unemployed mothers, whose overall prevalence of undernutrition was 69.8% (95% CI: 65.0, 74.7), children of employed mothers had a prevalence of undernutrition of 27.4% (95% CI: 22.7, 32.2). Being male child (AOR = 3.40, 95% CI = (1.91, 6.04)), increasing age in one month (AOR = 0.89, 95% CI = (0.84, 0.95)), household food insecurity (AOR = 5.80, 95% CI = (2.95, 11.43)), not having ANC follow-up (AOR = 3.71, 95% CI = (1.90, 7.25)), and not exclusively breast fed (AOR = 2.29, 95% CI = (1.19, 4.40)) were significantly associated with under-nutrition among 6-23 month old children of unemployed women. On the other hand, being male child (AOR = 6.02, 95% CI = (2.99, 12.11)), increasing age by one month (AOR = 0.86, 95% CI = (0.80, 0. 0.92)), being sick during the last two weeks prior to data collection (AOR = 6.17, 95% CI = (3.09, 12.30)), not immunized to their age (AOR = 4.66, 95% CI = (1.87, 11.59)), and low meal frequency (AOR = 4.60, 95% CI = (2.09, 10.16)) were significantly associated with under-nutrition among 6-23 month old children of employed women. Conclusion: The prevalence of under-nutrition among children of unemployed women is significantly higher than those children of employed women which consolidate the evidence that women’s employment status have a positive association with child nutrition. Different factors were also identified as significant predictors of child under-nutrition among these two groups (employed and unemployed women). Therefore, tailored interventions addressing modifiable risk factors of child under-nutrition such as ANC follow-up during pregnancy, child immunization, meal frequency, food security and exclusive breastfeeding should be devised so as to improve nutritional status of children in the study area. Keywords: Under-nutrition, Children, Maternal Employment, Dera district, Ethiopia