Handwashing plays a major role in preventing the spread of infection and, if poorly implemented, leads to different illnesses. However, the quality of water meant for handwashing and handwashing practice and hand hygiene conditions of food establishment customers are overlooked issues, unlike drinking water and hygienic conditions and practice of food handlers. This study aimed to assess the microbial quality of water used for handwashing and hygienic practice and the status of customers of food establishments and associated factors in Ginjo Kebele, Jimma town, Southwest, Ethiopia. A cross-sectional study design was employed in July 2022. Forty water and 40 hand swab samples were taken and analyzed for total coliform and E. coli using the spread plate method. Handwashing facility conditions and the handwashing practices of customers were assessed using a checklist and questionnaire. The data were analyzed by SPSS version 23 software. The median handwashing water total coliform count was 390.0 CFU/ml. The median hand swab samples’ total coliform and E. coli load were 21.6 and 4.8 CFU/cm2, respectively after handwashing practice. There was an uphill correlation between the handwashing water and hand swab sample total coliform load ( r = .34, P = .032). The mean handwashing efficacy for the removal of total coliform was 25.8%. The microbial load was varied with the type of water container used, method of taking water from the container, handwashing practice, and hand drying. The microbial quality of handwashing water and hand swab samples didn’t comply with the acceptable limit. Thus, governmental bodies should work to improve the handwashing practice of communities. Food establishment owners should treat water for handwashing, clean the water containers, handle the water properly, and avail soap and poster demonstrators to the handwashing facilities. The customers should also comply with proper hand washing practices and reduce hand contamination.