The purpose of this study was to investigate the factors that determine customer’s adoption of electronic banking service. The study tried to be built on the widely used model for technology adoption, the Technology Acceptance Model (TAM) and Innovation Diffusion Theory. This study analyzed whether the relative advantage, awareness, perceived usefulness, perceived risk, compatibility, perceived ease of use, perceived trust, and perceived charge have significant impact on customer’s adoption of electronic banking. The data used to conduct this research was collected from a sample of 375 customers of commercial bank of Ethiopia in bahir dar through questionnaire. Judgmental sampling technique was used to select sample respondents. The research used explanatory and descriptive research design. The analysis of the data was done with the help of SPSS v 20 software package. The result of the study showed that perceived risk, perceived charge, awareness, perceived ease of use, relative advantage, perceived trust, and perceived usefulness have significant impact on adoption of electronic banking service. Furthermore, compatibility was found to have insignificant effect on adoption of electronic banking service. Based on this finding, it’s recommended that the bank should have to educate users about the available service, the benefits of using electronic banking services and relative advantages of electronic banking service over traditional banking service.