This study aimed to measure the perceived IC and CCL levels, relationship between the two and contribution of the former to the latter among EFL students in Ethiopian higher education. It also strived to attain in-depth accounts of the underlying intercultural dynamics shaping the students‟ CCL experiences. A pragmatic, explanatory-sequential, mixed methods research design was thus employed. The quantitative data was gathered through Intercultural Competence Scale (ICS) and Classroom Life Measure (CLM) questionnaires administered to 292 randomly selected first year, regular, communicative English students in Debre Tabor University (DTU). Descriptive and inferential statistics were used to analyze the quantitative data via SPSS. Primary qualitative data was collected through FGD sessions with 19 purposively selected students, and thematic analysis was employed to analyze the data. The quantitative results reveal that the target university EFL students have significantly high (above average) perceived IC and CCL levels that are found to have a significant positive relationship. Moreover, overall IC level is attested to be a significant positive perceived predictor of CCL among the students, where intercultural knowledge, behavioral performance and affective orientation significantly contribute to this effect. As such, the qualitative findings expose that students‟ CCL is shaped by intercultural dynamics that are cognitive (intercultural knowledge and experience), behavioral (language differences, additional language/lingua-franca skills, and communication strategies), and affective (attitude toward other cultures, ethnic tensions and conflicts, as well as ethnocentric influences from social media and ethnic peers). Students‟ intercultural knowledge, behavior and attitude yet tend to gradually improve with increased exposure to intercultural interactions and group work in the university. Based on the findings, fresh implications and recommendations are offered for cooperative EFL learning theory, pedagogy and research in intercultural higher education