Ethiopia is one of the centers of genetic diversity of sesame (Sesamum indicum L.). The sesame genetic resources present in the country should be explored for local, regional, and international genetic improvement programs to design high-performing and market-preferred varieties. This study’s objective was to determine the extent of genetic variation among 100 diverse cultivated sesame germplasm collections of Ethiopia using phenotypic traits and simple sequence repeat (SSR) markers to select distinct and complementary genotypes for breeding. One hundred sesame entries were field evaluated at two locations in Ethiopia for agro-morphological traits and seed oil content using a 10 × 10 lattice design with two replications. Test genotypes were profiled using 27 polymorphic SSR markers at the Oil Crops Research Institute of the Chinese Academy of Agricultural Sciences. Analysis of variance revealed significant (p ≤ 0.05) entry by environment interaction for plant height, internode length, number of secondary branches, and grain yield. Genotypes such as Hirhir Kebabo Hairless-9, Setit-3, Orofalc ACC-2, Hirhir Humera Sel-6, ABX = 2-01-2, and Setit-1 recorded grain yield of >0.73 ton ha−1 with excellent performance in yield component such as oil yield per hectare. Grain yield had positive and significant (p < 0.01) associations with oil yield (r = 0.99), useful for simultaneous selection for yield improvement in sesame. The SSR markers revealed gene diversity and polymorphic information content values of 0.30 and 0.25, respectively, showing that the tested sesame accessions were genetically diverse. Cluster analysis resolved the accessions into two groups, while population structure analysis revealed four major heterotic groups, thus enabling selection and subsequent crossing to develop breeding populations for cultivar development. Based on phenotypic and genomic divergence, the following superior and complementary genotypes: Hirhir Humera Sel-6, Setit-3, Hirhir Kebabo Hairless Sel-4, Hirhir Nigara 1st Sel-1, Humera-1 and Hirhir Kebabo Early Sel-1 (from cluster II-a), Hirhir kebabo hairless-9, NN-0029(2), NN0068-2 and Bawnji Fiyel Kolet, (from cluster II-b). The selected genotypes will serve as parents in the local breeding program in Ethiopia.