Over the past several years, rural areas in transition countries including Ethiopia have experienced a structural transformation in their agricultural sectors combined with profound demographic changes, primarily due to massive out migration of the rural active and educated labor forces toward urban areas and abroad. Despite the potential relevance of migration and resulting remittances in fostering or hindering of transformation in agriculture, in Ethiopia little is understood about the linkage between these activities. This study aimed to analyze the impact of rural out migration on agricultural production by using a cross-sectional data obtained from randomly chosen 270 rural farm households during 2016/17 production season. A two stage Cobb-Douglas production function was used. The estimated results of the first stage showed that out-migration of labor from rural areas had insignificant effect on the labor hours allocated for agricultural activities of both temporary and permanent migrant sending households. On the other hand, the remittance income from migrant had significant and increasing effect on farm capital stock of permanent migrant sending households. Yet, it had positive but insignificant effect on farm capital stock of temporary migrant sending households. The second stage analysis revealed that migrant sending households obtain higher income than non-migrant sending households especially the permanent one. This indicated that rural out migration had a positive impact on agricultural production of study area on the rural households. The study recommends that Ethiopian government should give emphasis to the potential contributions of outmigration in supporting or generating employment opportunities.