Background In urban settings, the presence of a high density of human population and contacts with domestic and or stray animals such as dogs and cats can be risk factors for the transmission of zoonotic diseases. Toxoplasma gondii (T. gondii) and Leishmania spp. are zoonotic protozoon parasites with great health burdens worldwide. Methods A cross-sectional study was used to investigate the antibody prevalence and risk factors of T. gondii and Leishmania spp. infections in 385 randomly selected dogs of Ambo, Bako, and Gojo towns of West Shewa zone, Oromia regional state, Ethiopia. A questionnaire survey was administered to households to collect data on potential risk factors. Dog sera samples were assayed for T. gondii IgG antibodies by using the direct agglutination test while Leishmania spp. specific antibodies were tested using an indirect enzyme-linked immunosorbent assay (ELISA) kit. Logistic regression was used for data analysis. Results An overall 82.86% (95% CI): 78.71–86.49%) and 92.47% (95% CI: 89.36–94.90%) seroprevalence of T. gondii and Leishmania spp. was found respectively. Seropositivity for both T. gondii and Leishmania spp was found in 82.58% of the dogs. None of the investigated factors were associated with Leishmania spp. seropositivity (p > 0.05). Furthermore, altitude, sex, breed, housing, feeding, educational level of head of the household, and the living area of dogs were not significantly associated with T. gondii seropositivity (p > 0.05). The seroprevalence of T. gondii was significantly different between the study towns (p = 0.003). The risk of T. gondii infection was 2.71 times higher in adult dogs than juvenile dogs (p = 0.043). Dogs kept simultaneously with other domestic animals had increased odds of T. gondii seropositivity as compared to those with no other domestic animals (Adjusted Odds ratio: 1.96, p = 0.021). Conclusions The high seropositivity and the concomitant presence of antibodies of T. gondii and Leishmania spp. in dogs suggest the widespread nature of these parasites in the environment and the high potential of transmission to other animals and humans. Further epidemiological studies, isolation and molecular characterization of the parasites, and educational campaigns are suggested.