The main objective of this study was to investigate the effect of relationship marketing on customer loyalty in Cooperative Bank of Oromia. To examine influence of the independent variables on the dependent variable under the study, the researcher used descriptive and explanatory research design to understand the effect of relationships between the explained (customer loyalty) and explanatory variables. The researcher used a quantitative research approach which allows for gathering numerical data, measuring variables, predicting and using statistical procedures to analyze and develop inferences. The population of this study comprises customers of the Cooperative Bank of Oromia in Bahir-Dar City Branches. The study used primary data source. The study used a simple random sampling technique to give equal chance of the respondents and to be free from biasness in selecting them under the study. The finding indicated that the explanatory variables of commitment, trust, communication, and information technology system are significant predictors at a 95% confidence level. This finding revealed that these four independent variables have a significant positive effect on customer loyalty in Cooperative Bank of Oromia. But, one independent variable conflict handling was found to be insignificant in affecting customers’ loyalty in the study; because it was not significant at less than 0.05 alpha values. It is recommended that the Cooperative Bank of Oromia should attempt to gain customers’ trust. The ways in which this can be achieved include, giving and keeping promises to customers, showing concern for the reliability of the rental services, providing quality services, showing respect to customers through front-line staff, fulfilling obligations, and acting to build customers’ confidence in the company and its services. The management of the bank should realize that relationship marketing plays a major role in influencing customer loyalty, therefore that they should emphasize on improving relationship marketing strategies to influence customer loyalty positively.