This study examines the determinants of the financial performance of commercial banks in Ethiopia by using panel data from fifteen sample commercial banks that have worked in Ethiopia for more than five years over the period 2018–2022. Since the data is secondary in nature, the quantitative approach to research was used. Besides, the explanatory research design was used. Under this study, both internal and external factors were considered. The internal factors used in this study include capital adequacy, asset quality, earning ability, liquidity management, and bank size, whereas the external factor is the foreign exchange rate. Moreover, ROA, ROE, and NIM were used to measure financial performance. This study runs a redundant fixed effects test using the Hausman specification test. Hence, based on the result, explanatory research design was adopted. Based on the regression result, asset quality, earning ability, and bank size have a significant influence on the financial performance of Ethiopian commercial banks measured by return on assets, return on equity, and net interest margin. Thus, the management bodies of commercial banks should strive to strengthen the identified significant factors