Background: Child birth which is a special moment for parents, families and communities is also a time of intense vulnerability. In many developing countries including Ethiopia, maternal morbidity and mortality still pose a substantial burden. Raising awareness of women about the danger signs of pregnancy and childbirth is the first essential step in appropriate and timely obstetric care. Objective: To assess the knowledge of obstetric danger signs among mothers and associated factors in Shashamane town, oromia region, Ethiopia. Methods: A community based cross sectional study design was employed. All kebeles were included in study; the number of households was determined using proportionate-to-population size then systematic random sampling technique to select 422 women who gave birth in Shashamane town between April and May 2018. A structured questionnaire was used to collect data. Data was checked and entered into Epi data version 3.1 then exported to Statistical Package for Social Science version 23 for analysis. Univariate, bivariate and multivariable analysis with 95% CI was carried out. Women who spontaneously mentioned at least two danger signs of pregnancy from eight items were considered to have good knowledge of the obstetric danger signs. Result: A total of 422 mothers were involved in the study. The mean age of the respondent was 25 with a standard deviation of 4.3 year. 59.5% of the respondents were found to have poor knowledge of obstetric danger signs. Majority of respondents mentioned vaginal bleeding (64.7%) as a danger sign of pregnancy. According to the result of the multivariable analysis, antenatal care was significantly associated with the knowledge of obstetric danger sign. Respondents who attended antenatal care were 1.26 times more likely to have good knowledge of obstetric danger signs than those who had no antenatal care [AOR = 1.26, 95%CI (1.08-1.85)]. Respondents who gave birth at health center were 3.57 time more likely to have good knowledge of obstetric danger signs than those who gave birth at home [AOR = 3.57, 95%CI (1.23-10.39)]. Conclusion: According to this study, the knowledge of obstetric danger signs was poor. Some of the factors associated with this knowledge were antenatal care attendance and place of delivery; therefore, it is recommended that mothers should have at least four antenatal visits; this may create good relationship with the providers and enhance their knowledge. In addition to this providing compassionate and respectful maternity care in health facility is also crucial steps to attract more women to health facilities, and to reduce home deliveries.