Abstract: Banking system is one part of financial institution that plays an important role in economic growth and development of a country. The aim of this study was to assess the determinants of Ethiopian commercial banks efficiency. The study was based on secondary source of data. Quantitative data were obtained from published and audited financial statements of commercial banks in the period of 2003 –2012. To this end, measuring the efficiency of decision-making units (DMUs) has been growing in today’s banking system. The efficiency estimation of individual banks was evaluated using Data Envelopment Analysis (DEA). Likewise, to investigate the determinants of efficiency Tobit model was used. In Ethiopia banking industry embraces about nineteen commercial banks. Among which eight banks were selected as a sample size via purposive sampling techniques. The result of this study revealed deposit and liquidity has significant positive relationship with commercial banks efficiency.