Abstract This study presents a comprehensive assessment of municipal solid waste management within the market centers of Bahir Dar City, Ethiopia, with a focus on waste generation rates, composition analysis, and the formulation of an effective waste management plan. Utilizing a two-stage random sampling technique, 36 samples were collected from two representative market centers. Data collection methods included waste sampling, structured questionnaires, and semi-structured interviews with key stakeholders. Results indicate significant variability in waste composition among different trade sectors, underscoring the necessity for sector-specific waste management strategies. Particularly, retail trade emerged as the primary contributor to waste generation, closely followed by the food service sector. Disparities in solid waste management practices across market centers were evident, with only a minority receiving regular and separate waste collection services. Furthermore, the study identifies substantial potential for waste reuse and recycling, driven by a high market demand for recyclable and reusable materials. However, challenges in the collection and handling phase were identified as critical bottlenecks, hindering efficient waste management and resource utilization. In conclusion, this research contributes valuable insights for urban planners, policymakers, and stakeholders involved in sustainable waste management practices. The proposed waste management plan, rooted in the circular economy approach, aims to address identified challenges while capitalizing on economic opportunities associated with recyclable materials. By addressing these issues, the study aims to foster more sustainable and efficient municipal solid waste management practices in Bahir Dar and similar urban contexts.