Groundwater is a vital source of water for domestic and agricultural activities in Raya valley due to non-perennial flow of surface water.Thus the present study aims to evaluate the groundwater quality and assess its suitability for drinking and irrigation purposes. A total of 137 groundwater samples were examined for various physico-chemical parameters to evaluate the quality and suitability of groundwater for the intended purposes. Piper-Hill diagram was adapted to infer hydro-geochemical facies and water types. The suitability of groundwater for drinking purpose was evaluated by comparing the analytical results of different water quality parameters to the Ethiopian standard as well as World Health Organization Standards (WHO, 2006). Salinity, sodicity and related parameters were considered to evaluate the suitability of the groundwater for irrigation use. The dominant water types are magnesium bicarbonate and sodium-calcium bicarbonate.The hydrochemistry of the groundwater changes from Mg-Ca-HCO 3 dominance at the foot of volcanic hills to Ca-Mg-Na-HCO 3 and Ca-Na-Mg-HCO 3 at the valley floor. On the basis of total hardness, 46 % of the water samples in Raya valley fall in the very hard water class whereas, based on TDS values 95% of the water samples are found to be permissible for drinking. With the exception of three constituents (Mg 2+ , Ca 2+ and K +), all other analyzed constituents in groundwater are within the established standards of Ethiopia. Water suitability for irrigation indicates that the groundwater fall in the range of good to permissible, however, higher salinity, magnesium hazard and low permeability index restricted its suitability in southeastern parts of the study area.