Background Competence is defined as the ability to perform a task with desirable outcomes. Globally, an estimated 530,000 women and 2 million newborns die each year, because of no access to competent health professionals. But half of those deaths can be prevented with competent health professionals. However, the existing literature shows that most new graduates have a lack of competence in the clinical environment, none of them have assessed whether student or preceptor factors have an association with clinical competence or not. So, this study is crucial to fill data scarcity. Objective To determine the clinical practice competence and associated factors among midwifery and nursing students at Dire Dawa. Methods Institutional cross-sectional study was conducted on nursing and midwifery students from February 10/2020 to February 30/2020. Self-administered questionnaires were given to 318 students through a simple random lottery. Multivariate logistic regression analysis was done for variables with a p-value <0.2 in binary logistic regression. The odds ratio was used to measure the degree of association. Results Only 19.2% are clinically competent. Students who were oriented about assessment methods were 4 times more likely competent [AOR = 4.096 p-value 0.035]. Students who have staff encouragement and have preceptors were 5 times [AOR = 4.900 p-value 0.12] and 11 times [AOR = 11.052 p-value 0.00] more likely competent, respectively. Confident students were 4 times more likely competent [AOR = 4.460, p-value 0.005]. Conclusion The prevalence of clinical competence is very minimal. This is due to assessment methods orientation, staff encouragement, clinical preceptor support and students’ confidence. This finding contributes to the federal ministry of health should work closely with teaching institutions, health facilities, and other stakeholders to overcome those gaps.