Introduction Antibiotics are commonly used for the treatment and prevention of bacterial infections. The potency of antibiotics can be affected by factors such as temperature, light, moisture, and storage conditions. Inappropriate storage and transportation of antibiotics may lead to loss of potency earlier than the expiry date. The aim of this study was to determine the potency and associated factors of commonly retailed antibiotics. Method Institution-based cross-sectional study was conducted on commonly retailed antibiotics in pharmacies that are available in Adama, Ethiopia from March 2018 to June 2018. This study focused on commonly ordered antibiotics such as amoxicillin, azithromycin, ciprofloxacin, and ceftriaxone. Antibiotics to be tested were selected by using a simple random sampling technique. Socio-demographic and related data were collected using a semi-structured questionnaire. Antibiotic susceptibility testing was performed using the disc diffusion method as described in the Clinical Laboratory Standard Institute guideline. Results Mean inhibition zones of amoxicillin, ciprofloxacin, azithromycin, and ceftriaxone were 14.2 ± 4 mm, 30.9 ± 4.2 mm, 17.47 ± 3.83 mm, and 32.7±1.8 respectively. Out of 164 antibiotics tested, 61% passed the potency test. The potency of antibiotics varies across different countries in which 53.7% and 54.6 of antibiotics from India and Ethiopia passed the potency test. All ceftriaxone tested in this study passed the potency test. Factors such as air condition of pharmacy (X2 = 4.27; p = 0.039), source of all antibiotics (X2 = 5.41; p = 0.02), and source of amoxicillin (X2 = 4.73; p = 0.03) were significantly associated with potency of antibiotics. Conclusions About 40% of antibiotics tested in the current study did not pass the potency test; this warrants further investigation to identify the magnitude of the problem and its causes at a large scale.