ABSTRACT This study has examined the technical and allocative efficiency and the principal factors that cause efficiency differentials among smallholders irrigated on producers. The purpose of the study is to estimate Technical and Allocative Efficiency and to identify principal factors that cause efficiency differentials. This study uses cross-sectional data collected in 2018 irrigated crop production year from a total of 154 farm households randomly selected from five kebeles of Mecha Woreda in Koga irrigation project (in six irrigation cooperatives) of the Amhara Region growing irrigated onions. Stochastic production frontier was used to estimate technical, allocative and economic efficiency levels, whereas Tobit model was used to identify factors affecting efficiency levels. The results of frontier analysis indicated that there is substantial amount of inefficiency in onion production in the study area. Accordingly, the mean technical, allocative and economic efficiencies of sample households were 75.35, 15.68 and 10.94, respectively. Livestock holding and experience of households were the variables that positively affected the production of onion. Results of the Tobit model revealed that distance from the market and irrigation management significantly affected technical efficiency negatively and positively respectively. Age, experience and distance had positive and significant on AE while livestock holding had an opposite impact on allocative efficiency. On the other hand, age, experience and family size of households affected positively economic efficiency of producers. These indicate that there is a room to increase the efficiency in all these aspects of onion production in the study area. Therefore, government authorities and other concerned bodies should take into consideration the above mentioned socioeconomic and institutional factors to improve productivity of onion by smallholder farmers in the study area. Key words: Onion, efficiency, cobb-Douglas, stochastic frontier, Tobit.