Background Human immunodeficiency virus (HIV) infection is a major public health concern globally, especially in sub-Saharan African countries. Even though determining the incidence of treatment failure and its predictor is a crucial step to reduce the problem, there is limited information indicating the incidence and predictors of treatment failure among children in Ethiopia. Therefore, this study was conducted to assess the incidence and predictors of treatment failure among children on first-line antiretroviral therapy (ART) in Amhara Region referral hospitals, Northwest Ethiopia. Methods An institution-based retrospective follow-up study was conducted from January 30, 2011, to January 30, 2018. A total of 402 children on first-line antiretroviral therapy were selected with a simple random sampling method in Amhara Region Referral Hospitals, Northwest Ethiopia. Data were extracted by reviewing patients’ ART intake and follow-up forms using pretested and structured checklists. The collected data were entered into Epidata Version 4.2 and analysis was done using STATA Version 13. Bivariable and multivariable Cox proportional hazards regression models were fitted to identify predictors of treatment failure. Results A total of 402 records of children on antiretroviral therapy (ART) were reviewed and treatment failures rate within the follow-up period were 12.19% (95% CI: 8.5, 15.88). This study also found that the overall incidence density rate was 3.77% per 100 person-years observation. Virologic failure accounts 48.98% followed by immunologic (28.57%) and mixed failures (22.44%). Poor ART adherence (AHR: 4.6, 95%CI: 1.61, 13.20), drug regimens, AZT-3TC-NVP (AHR: 5.2, 95%CI: 1.9, 14.26), and AZT-3TC-EFV (AHR: 6.26, 95% CI: 1.88, 20.87), Children whose both parent were died (AHR: 2.8, 95%CI: 1.07, 7.37) and world health organization (WHO) clinical stage-4 (AHR: 2.95, 95%CI: 1.04, 8.366) were found to be predictors for treatment failure among children. Conclusion The proportion of treatment failure among children on first-line ART in Amhara Region referral hospitals, Northwest Ethiopia was found to be high. Nearly half of the children experienced Virologic failure. Poor ART adherence, children whose parents`died without parents, WHO clinical stage-4 at baseline and type of regimen patients took were found to be predictors of first-line ART treatment failure. Therefore, expanding access to routine viral load, CD4 and clinical monitoring is mandatory to detect and early intervene of treatment failures’ to improve outcomes for children on ART. Patient caregivers or parents should strictly support children on medication adherence. Training to health professionals should be given time-based on revised guidelines, and follow up of treatment outcome should be monitored nationally to take the appropriate intervention.

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