Water bodies in developing countries are subjected to severe anthropogenic and industrial pollution. As a result, there is an urgent need to assess the water quality using biological parameters especially that of chironomids. For this purpose, chironomid larvae were sampled using D-frame net and identified to the lowest possible level (species) in Obi River, Oromia Region, Ethiopia. Samples were collected at three sites along the river gradient between November 2014 and May 2015 with two sites classified as highly impacted and one as reference site based on major land use and habitat quality assessment. Seven physico-chemical parameters (pH, Temperature, Electrical Conductivity, Total dissolved solids, salinity, Nitrate-nitrogen, and Nitrite-nitrogen) were assessed. The result of this study showed that there were significant correlations between the species and several physico-chemical parameters. Higher value of Electric Conductivity, Salinity, TDS, Nitrate-nitrogen, and Nitrite-nitrogen was recorded at site II and site III than site I (reference site). A total of eight Chironomid species comprising of 233 individual were collected. The most abundant taxon was Chironomus alluadi (40.7%) followed by Dicrotendipus septemmaculatus (22.7%) and Chironomus tentans (12.45%) at site one. Other identified chironomid were Chironomus imicola (9.9%), Polypedilum nubifer and Polypedilum type wabe (2.6%), Rheotanytarsus spp. (6.9%) and Ablabesmyia dusoleili (2.15%). Abundance and diversity were low during the dry season at site 1 while the highest number of taxa and individual organisms were recorded in November and May. Furthermore, according to the Pearson’s correlation index, density of chironomid larvae was significantly correlate with ecological parameters of the river water. For example, Polypedilum type wabe, showed positive correlation. but, Chironomus imicola, Rheotanytarsus spp. Ablabesmyia dusoleili, Dicrotendipus semtammaculatus and Chironomus tentans were showed significantly negative correlation except in few physicochemical parameters Generally, results revealed that the family Chironomidae could be use to assess environmental water quality status.