The main objective of this study was to investigate the determinants of financial performance of Ethiopian commercial banks that was measured by return on Equity (ROE). The thesis explained how the determinants of financial performance were affect the banks financial performance .The researcher applied quantitative research approach by adopting purposive sampling technique and explanatory type of research design. The data used for this study were secondary data that collected from 8 selected commercial banks in cross-sectional manner for the period of 16 years starting from 2008 through 2023.The financial data were collected from the audited annual financial statement of banks and NBE annual bulletins. The balanced panel data collected were analyze by using multiple regression models. Eviews-9 statistical software was used for data analysis. The relationship between the independent variable and ROE were examined by an econometric model. Outcomes of the study revealed for the existence of a positive and significant relationship between the two independent variable foreign exchange rate, GDP and financial performance of commercial Banks. On the other hand there was a negative and significant relationship between interest rate and financial performance of commercial banks. The study concluded that there was insignificant relationship among bank size and inflation rates with the financial performance of commercial banks in Ethiopia in the study period. The study recommends that the government should put up more measures to increase the country’s exports and foreign direct investment and the National Bank of Ethiopia should adequately put measures to safeguard the value of the domestic currency. This study significant for formulation of policies and regulations for banking industry and also beneficial for future academic research and suggest for further research.