Background: Tobacco product is a product totally or partially made of tobacco leaf as a raw material changed to a manufactured product. The study aimed to examine the relationship between tobacco product, raw material cost, sale value and tax paid in Ethiopia using annual time series data from the 1996 to 2018. Method: The study used the best popular method of Augmented Dickey Fuller and Phillips Perron unit root test for stationarity test. Vector Autoregressive model with trend model was applied. Johansen cointegration test was used to determine the number of cointegrating equation. The cointegration test used to show the presence of long run relationship and vector error correction model (VECM) was more appropriate as compared to pure VAR. Granger causality, impulse response functions and forecast error variance decompositions were applied. Result: The Augmented Dickey-Fuller and Phillip-Perron unit root test showed that all series were stationary after first differencing. Johansen cointegration test revealed there are two cointegrating equation. The VECM show product was increased by 0.57and 0.40 sticks when it’s lagged value increased by one stick but the other variables are affected by the first and second lagged variable’s values. VEC Granger causality provided that product uni directional causality to the others variables but not the reverse. Raw material cost, sale value and tax all have bi-directional causality between each other. The impulse response analysis show that shock of product and sale value leads to mix of negative and positive response of product. Forecast error variance decompositions shows that the portion of the variance in the forecast error for each variable due to innovations to all variables in the system. This proportion decrease or increase according to shock effect on the endogenous variable. Conclusion: from VECM there exist a long run and short run relationship among the variables. Each variables shock has influence on the other variable in the system and there is uni-directional and bi-directional causality among the variables. Seven years ahead forecasting was done and has increasing trend in certain manner. There should be deserved to take tobacco control action. Key words: Tobacco, vector error correction model, cointegration, Granger causality,