Background Gastrointestinal helminthiasis poses economic impacts on the dairy sector by reducing milk production. This study aimed at estimating the prevalence of gastrointestinal helminthiasis, the burden of helminths, and appraising potential factors associated with the prevalence in lactating cows. The study was also designed to elucidate the effects of anthelmintic treatment on milk yield, milk fat, and protein content in the Kucha district. Methods A cross-sectional and field clinical trial study designs were used. Standard parasitological techniques (floatation and sedimentation) were employed to detect cows’ infection status. McMaster and Stoll’s egg counting methods were used to estimate helminths' burden. All putative factors that might have been linked with infection were recorded by field observations and farmers' interviews. Sixty cows tested positive for the parasitic infection in the cross-sectional study design were randomly assigned into one of the two groups (dewormed Vs control). Milk yield, milk fat and protein contents were recorded in both groups on day zero and then on weekly basis. Descriptive statistics, binary logistic regression, and repeated measure ANOVA were used to analyze the data. Results Overall, of 422 examined cows, 150 (35.5%, 95% CI; 30.9-40.3%) were infected with at least one of the gastrointestinal helminth parasites. Strongyle nematode was the predominant type accounting for 52% of the total record. Analysis of fecal egg count (FEC) in infected cows depicts the highest record of Parampistomum egg, accounting 457.14 ± 275.45 Egg per gram (EPG) of feces. The prevalence of gastrointestinal helminthiasis in cow that had an average body condition score of 1.7 was over two fold higher (OR = 2.19, 95% CI = 1.17–4.17, P = 0.016) than in cows with 6.3 body condition score. A significant improvement in milk yield, milk fat, and milk protein was observed in dewormed cows over 28 days period. Conclusion Gastrointestinal helminthiasis is threatening the welfare of lactating cows in Kucha, Ethiopia given its negative association with the body condition score. Gastrointestinal helminths are responsible for the reduction of milk yield and loss of milk fat and protein. However, an improvement in milk yield, milk fat, and milk protein after deworming using Tetrox® (Tetramisole and Oxyclozanide combination), a new drug to the area/ a drug used by relatively few farmers in the study area, proves the effectiveness of strategic deworming.