Background: In developing countries, open defecation is still a major health issue. While there has been a great deal of empirical research on latrine coverage. But little is known about household latrine utilization behavior. The objective of this study was to assess latrine utilization and associated factors among Community-Led Total Sanitation and Hygiene (CLTSH) implemented kebeles in Gurage Zone, Southern Ethiopia. Methods: A community-based cross-sectional study was conducted on 585 randomly selected households in Gurage Zone’s rural Community-Led Total Sanitation and Hygiene (CLTSH) implemented kebeles. The data were entered into Epi-data version 3.1 and analyzed in SPSS version 20. A binary logistic regression analysis was used to identify factors associated with latrine utilization, and a P-value < .05 was used to declare significance. Results: In this study, 65.8% of households used latrines [95% CI: 61.8%-69.8%]. The odds of using a latrine were higher in households with less than 5 family members [AOR = 2.53, 95% CI: 1.33-4.84], in households with no vegetation around their latrines [AOR = 4.56, 95% CI: 2.27-9.18], households with clean latrines [AOR = 2.19, 95% CI: 1.17-4.12], households with latrines located <6 m from the dwellers [AOR = 5.94, 95% CI: 3.13-1.27], households with latrines located 6 to 10 m from the dwellers [AOR = 3.94, 95% CI: 1.93-8.03], households head not attending formal education [AOR = 0.24, 95% CI: 0.13-0.44], households without school children [AOR = 0.15, 95% CI: 0.08-0.28], households owned latrine for less than 1 year’s [AOR = 0.24, 95% CI: 0.12-0.49], Households owned latrine for 1 to 3 year’s [AOR = 0.39, 95% CI: 0.25-0.64], and latrine that does not require maintenance 1.94 [AOR = 1.92, 95% CI: 1.04-3.61], were significantly associated with latrine utilization. Conclusion: The findings of this study revealed that open field defecation is still practiced by households in CLTSH implemented kebeles. Therefore, to improve latrine utilization, community awareness must be raised through regular training on proper latrine construction, latrine usage, and sanitation and hygiene practices.