Introduction Blood donation is the process of collecting blood from donors who are at low risk for infection and unlikely to jeopardize their own health. Blood donation addresses maternal and child mortality and contributes to saving millions of lives. But many African countries including Ethiopia are far below the minimum blood collection rate. Furthermore, the blood donation practice is not well studied among young university students in the study area. Hence, this study was done to assess the blood donation practice and associated factors among Wollega University students, Ethiopia. Methods A cross-sectional study was conducted among 387 students of Wollega University. The students were selected by systematic random sampling. Self-administered questionnaire was used to collect the data. The data were entered into Epidata V.3.1 and exported to SPSSV.25 for analysis. Both bivariate and multivariate logistic regressions were used to identify the associated factors. Adjusted odds ratio with 95% confidence interval and P-value <0.05 were used to declare the statistically significant associations in the multivariable regression. The analyzed result was presented using tables, graphs, and text. Results Of the 360 respondents, 147 (40.8%; 95% CI: 35.7–46.1%) ever donated blood. Blood donation practice was significantly associated with college of the students (AOR = 3.247; 95% CI: 1.348–7.820), not taking part in blood donation campaigns (AOR = 0.285; 95% CI: 0.161–0.503), knowledge of blood bank location (AOR = 5.297; 95% CI: 3.081–9.110), knowledge about blood donation (AOR = 2.035; 95% CI: 1.123–3.686) and attitude toward blood donation (AOR = 2.266; 95% CI: 1.122–4.577). Conclusion The magnitude of blood donation in this study was found to be less than the recommended level by the World Health Organization. Absence of the blood donation campaigns, college of study, lack of knowledge, and poor attitude toward blood donation were the factors that influence the blood donation practice. All health and related institutions including the Wollega University must work in coordination to improve the blood donation practice focusing on the regular voluntary blood donors.