Attaining sustainable sanitation in urban slum community is still an issue and continues to be a gap. Furthermore, factors associated with sanitation practices among slum dwellers has not been yet well explored in many low income countries, such as Ethiopia. This study was designed to determine the sanitation practice and associated factors among slum dwellers residing in urban slums of Addis Ababa, Ethiopia. A community based cross-sectional study was employed. The systematic random sampling technique was used to select households from the slum community in Addis Ababa, Ethiopia. A pre-tested structured interviewer administered questionnaire was used to collect data. Descriptive statistics were computed. Multivariable logistic regression analysis was used to identify associated factors. A total of 335 slum dwellers were involved in the study, of which 64.5% of the households use unimproved sanitation facility and 78.3% of the sanitation facilities were in poor condition. Less than half, 46.9% (95%CI: 41.5, 52.2%) of the slum dwellers had good sanitation practices. Having an improved sanitation facility (AOR= 7.27, 95%CI: 3.09, 17.05), having pour-flush type of sanitation facility (AOR= 4.32, 95%CI: 1.99, 9.39), presence of solid waste collection container inside the house compound (AOR=4.26, 95%CI: 2.02, 8.97), and good hygienic knowledge (AOR=4.37, 95%CI: 1.87, 10.24) were factors associated with good sanitation practice. Poor sanitation practices and unhygienic sanitation facilities were widely reported by slum dwellers and acute in the urban slum of Addis Ababa. Escalating household improved sanitation facilities along with strong health promotion programs on sanitation and hygiene practice is recommended.