In Ethiopia, shallot (Allium cepa L. Aggregatum) is one of the most important horticulture commodities used for flavouring of the local stew 'wot' and source of income for farmers. Poor nutrient management and quality variety are among the factors that contribute low production in the study area. In view of this fact, the field experiment was conducted in Debre Markos district at Debre Markos University during 2019/2020 irrigation season. The objective of this experiment was to assess the optimum nitrogen fertilizer rate and best performing shallot varieties for its yield and yield components. The treatments was consisted of four shallot varieties namely Negele, Huruta, Minjar and Local landrace with five level of nitrogen fertilizer rate specifically (0, 50,100,150 and 200 kg ha-1) with factorial arrangement tested in randomized complete block design with three replication. Data was collected on phenology, growth and yield and yield components of shallot. According to the present study the soil was poor in N fertilizer content. Nitrogen was no significantly influence plant height, stand count, stem number per hill and number of bulbets per bulb. Maturity days, leaf length, marketable yield, unmarketable yield, bulblet weight, bulb weight and total yield were significantly influenced by application of nitrogen. Highest marketable (26.187t ha-1) and total yield (27.89t ha-1) was recorded from Minjar variety supplied with 50 kg ha-1 N. Local variety treated with 200 kg ha-1recorded the lowest total yield (8.18 kg ha-1). Generally, the result showed that all improved varieties have best performing and give high yield than local variety. Economic analysis also revealed that combined application of Minjar with 50 kg ha-1treatment gave the highest net benefit (705809 ETB ha-1) with MRR (5032.17%) followed by 0 kg ha-1of N fertilizer with use of Minjar variety. In conclusion, the above findings indicated that the growth and productivity of shallot at Debre Markos area can be improved by the combined application of Minjar variety and 50 kg ha-1 N fertilizer. However, further study needs to be conducted at different season and location, by considering application rate of N fertilizer treatment combinations to generate more reliable information. Keywords: Interaction effect, marketable yield, variety, nutrient