Background: About 8 to 44% of all child mortality in Africa is associated with undernutrition. To alleviate this problem, it is necessary to determine the magnitude and determinants of undernutrition. However, there is scarce evidence in an urban setting like Ambo town. Therefore, this study assessed the magnitude and factors associated with undernutrition under five children in Ambo town, west Ethiopia.Methods and patients: A community-based cross-sectional study was conducted in Ambo town from March 01 - 30, 2020. A systematic sampling technique was employed to select 363 study participants. Nutritional status indices were generated using ENASMART software. After testing for collinearity, variables with a p-value < 0.25 in binary logistic regression were interred to backward multiple logistic regressions at a level of significance of p < 0.05. Results: This study found 16.00%, 25.30%, and 19.00% of the study participants were underweight, wasted, and stunted respectively. Decisions making on major food purchases, who usually care for the child, the age at which the child starts complimentary food, late introduction of complementary food were positively associated with wasting. Diarrhea, birth weight, child age, age at which the child starts complimentary food, consumption of milk and milk product, and who usually care for the child were significantly associated with underweight. Consumption of milk and milk products, household food security level, and birth weight were independent determinants of stunting. Conclusion: This study identified high prevalence of undernutrition, especially wasting. Child birth weight, age, diarrhea, feeing practice, house hold (HH) food security, Decision making on major food purchase, late introduction of complimentary food were found to be the potential determinants of undernutrition. Thus there should be an effort to improve the nutritional status of children in the study area by focusing on these factors.