Background: The Ethiopian health care system since 2005 has encouraged safe enhanced obstetrical care. However, hospital delivery has remained expensive for poor households due to hidden costs. Hidden costs are the costs that are not accounted for in direct hospital costs. The aim of this study was to estimate the hidden costs of institutional delivery and to identify its associated factors. Methods: A health facility–based cross-sectional study was conducted in the Bale zone from August 13 to September 2, 2018. Exit interviews were conducted among women who gave birth at the selected hospitals. A total of 390 women from 1 referral hospital and 2 general hospitals were included into the study. Systematic sampling technique was used to select study participants. Multiple linear regression analysis was done to identify the predictors of the hidden cost of institutional delivery. Result: The median hidden cost of institutional delivery was 877.5 ETB (32.03 USD). The median of the direct medical cost of normal delivery was 280 ETB (10.21 USD) while the direct nonmedical cost was 230 ETB (8.40 USD). For cesarean section, the median direct medical cost was 292 ETB (10.66 USD) while indirect costs were 591 ETB (21.60 USD). For forceps delivery, the direct medical cost was 362 ETB (13.21 USD) while the direct medical cost was 360 (13.14 USD). Distance of household from the hospital (β = 0.165), length of stay at the hospital (β = 0.050), mode of delivery (β = −0.067), and family monthly income (β = 0.201) were the explanatory variables significantly associated with the hidden cost. Conclusion: This study showed hidden cost of facility-based delivery was high. Distance, length of stay, income, and mode of delivery were the predictor of hidden cost. Ethiopian health care system should consider the hidden costs for pregnant women and their families.