A cross-sectional study was conducted from October 2011 to March 2012 on a total of 384 lactating (Zebu 183, Jersey103 and Holstein 93) dairy cows randomly selected from 29 rural kebele in which three small scale dairy farms were included. The study was designed with the objective to determine the prevalence of mastitis and isolate the major bacteria that causes mastitis involved in areka woreda and its surrounding wolayta zone. Milk samples was collected and bacteriological culture was done and further confirmation was done by BIOLOG identification system. The overall prevalence of mastitis in the area was 52.9% (n = 203), out of which 9.4% (n = 36) were clinical and 43.5% (n =167) were subclinical cases. Among the isolated bacterial genera, the isolate were Staphylococcus (14.8%), Streptococcus (7.5%), Corynebacterium (0.52%) and coliform (0.25%). Characterization was also under taken and the species recovered were Staphylococcus aureus 136 (54.4%) dominating followed by Streptococcus dysagalactiae 62 (24.8%), Staphylococcus intermidius (8.4%) Streptococcus.uberis 13 (5.2%) Staphylococcus epidermides (4.4%) Streptococcus agalactia 4 (1.6%), Corynebacterium pyogens 2 (0.8%) and Escherichia coli 1 (0.4%). There was no statically significant variation (P>0.05) between breeds and the parity number of the cow, but the prevalence of mastitis was found to be statistically significantly among different age groups and lactation stages (p<0.05). The study shows that mastitis is significant problem of dairy cows in the study area and the major isolated bacteria were contagious pathogens. Therefore, hygienic milking practice, culling of chronically infected cows and hygienic practice in the environment should be followed.