Background World Health Organization refers medication waste as expired, unused, spilled, and contaminated pharmaceutical items, medications, vaccines, and sera. Budget constraints in financing the health care system together with huge amount of wastage and disposal costs of unused medications at LMIC create a serious risk to the economy, health care system and environment. Thus, the aim of this study was to assess the rate of medication waste and to identify contributing factors in public health facilities in Dire-Dawa city. Methods An institution-based retrospective, cross-sectional study was supplemented by a qualitative study design from May 10 to June 10, 2021, at 2 public hospitals and 14 health centers. Qualitative data were collected by self-administered questionnaires and 2 years record review. In-depth interviews were used to obtain qualitative data. Excel sheets and SPSS version 20 and thematic analysis were used to analyze quantitative and qualitative data. Results An average medicine wastage rate was 3.07% between 2010 and 2012 EFY, in Dire-Dawa public health facilities that worth 4,048,594.0 ETB. The most wasted class of medication was anti-infectives, accounting for 2,360,330 ETB (58.3%), while tablets 2,615,391 ETB (64.6%). Medical waste has been linked to several issues, including pushing nearly expired medications to healthcare institutions, lack of clinician involvement in medication selection and quantification, rapid changes in treatment regimens, and the existence of overstocked medication shelves. Conclusion The average rate of medication waste was higher than the allowed level of 2%. The only medications that should be accepted by medical facilities are those that can be used before they expire. All prescribers should receive lists of the drugs that are readily available from the pharmacy department, and clinicians should be involved in the quantification and drug selection processes to increase the effectiveness of the use of medications.