A cross sectional study was conducted between January and May 2015 in and around Kombolcha town, Eastern Amhara, to identify methicillin resistant Staphylococcus aureus and their resistance to antimicrobials and also to identify risk factors associated with the occurrence of dairy cow mastitis. A total of 150 dairy cows were included during the study period. A total of 600 quarters were examined to detect clinical and subclinical mastitis by physical examinations of udder and milk and California mastitis test, respectively. The prevalence of mastitis was 56%. Age, milking hygiene, parity, and floor system had significant (p<0.05) effect on the prevalence of mastitis. S. aureus was isolated at a rate of 11 (73.3%) and 29 (42%) in clinical and subclinical mastitis, respectively. The result showed the occurrence of S. aureus in clinical mastitis was found to be significantly higher than subclinical mastitis (p=0.028). The present study showed that S. aureus was resistant to penicillin G (100%), amoxicillin (100%), cefoxitin (42.7%) and tetracycline (77.4%) however all the isolates were found to be totally (100%) susceptible to the gentamycin. 45.3% of the isolates were found to be multidrug resistant. Antimicrobial resistance is due to repeated therapeutic use of drugs. Regular antimicrobial sensitivity testing helps to select effective antibiotics that ultimately reduce the development of resistance towards commonly used antibiotics. In conclusion, Mastitis caused by S. aureus is one of the major problems of dairy cows in milk production in the study area.