Background: Undiagnosed depression among university students has an adverse effect on the wellbeing and academic performance of students. This study aimed to assess the prevalence of depression and associated factors among Debre Birhan university students. Methodology: Institutional based cross-sectional study design is conducted in Debre Birhan University from April to June 2013 E.C. Three hundred sixty nine students participated in this study which was selected by simple random sampling technique. Data were collected by using a self-administered PHQ-9 standard depression questionnaire. First the data was entered into in Epidata 3.1 and then was exported to SPSS version 20 for analysis. Associated factors were identified using binary logistic regression and variables with a p-value < 0.05 were declared as statistically significant factors with the outcome variables. Result: All of the study subjects were between ages 18 and 33 with a mean age of 22.65 9 ± 2.78. The overall prevalence of depression is 17.1%. Among this according to PHQ-9 scores cut scores, 161(43.6 %) scored as normal (0–4), 145(39.3%) scored as mild (5–9), 53(14.4%) scored as moderate (10–14), 4(1.1%) scored as moderately severe (15–19) and 6(1.6%) students scored as sever (> 20). In multivariate analysis being female AOR = 9.28[3.47–24.81], academic year AOR = 0.236[0.059–0.936], smoking 26.3[9.33–74.1] and alcohol use AOR of 2.62[0.95–7.21] are significantly associated with depression. Conclusion and recommendation: This study found a considerable proportion of undergraduate students with depression. Higher institutions need to pay special attention to students especially those who are female, junior students, smokers and alcohol users.