Abstract Background: Adverse health shocks are frequent events in low-income countries posing one of the biggest threats to the lives and livelihoods of the poor. In terms of modern health care and health indicators, the government of Ethiopia ranks low even as compared to other low income countries.. Health insurance increases access and utilization because of lowers the price of health care. There is a positive impact of health insurance in low and middle income countries on access and utilization. Objectives: To assess the effect of community based health insurance on health service utilization and its associated factors among members and non-members of in Bahir Dar zurea District, 2017 Methods: A community based comparative cross-sectional study was conducted in Bahir Dar zurea woreda from 01 to 30 February 2017. Households were addressed by using a multi stage sampling technique and the study population were768. Data were entered using EPI INFO version 7 and analyze by SPSS version 21.AOR and 95% CI were used to identify predictors of health service utilization. Results: A total of 768 households (384 insured and 384 uninsured) were interviewed. Health service utilization among CBHI members and non CBHI members were 67% and44.4% with (AOR=2.59, 95% CI: ((1.355, 3.040) respectively. Time taken to reach health facility (AOR=0.55, 95%CI :( 0.3,0.98)), Household monthly Income (AOR=0.186, CI :( 0.49, 0.69)), chronic illness (AOR= 0.28,95%CI:(0.12,0.67) and satisfaction(AOR=4.23,95% CI:(2.18,8.2)) were statistically significant with health service utilization for uninsured respondents; Time taken to reach health facility (AOR=7.91, 95% CI:(3.9,16.01)) and satisfaction(AOR=0.118, 95% CI:(0.06,0.23)) were statistically significant with health service utilization for insured one. (p<0.05). Conclusion and recommendation: - Community based health Insurance has significant association on health service utilization. Health Service Utilization among CBHI members is higher than non CBHI members. Income, time taken to reach the nearest health facility, and chronic illness were associated with health service utilization of non CBHI members. (p<0.05). Hence it is better to expand CBHI scheme to address the rural community to ensure accessibility of health care by avoiding financial difficulties to utilize the healthcare service. Key words: - Health Service Utilization, Community Based Health Insurance