Preterm premature rupture of membranes is one of the causes of premature birth and perinatal deaths, particularly in developing countries due to poor access and availability of medical resources to manage and sustain the pregnancy to term. Although, several risk factors for preterm premature rupture of membranes were identified, its association with inter-pregnancy interval was understudied. Therefore, we aimed to assess the incidence of preterm premature rupture of membranes and its association with inter-pregnancy interval in urban South Ethiopia. A community-based prospective cohort study was conducted among 2578 pregnant women, and followed until delivery. A generalized linear model for binary outcome was applied for the analysis, using a 95% confidence level and P-value. The incidence of preterm premature rupture of membranes was 2%, 95% CI: 2%, 3%. However, the incidence was varied across the months of inter-pregnancy intervals 4% (< 18 months), 2% (18–23 months) and 1% (24–60 months). The risk of preterm premature rupture of membranes was nearly three times (ARR = 2.59, 95%CI: 1.27, 5.29) higher for women with inter-pregnancy intervals < 18 months than 24–60 months. Inter-pregnancy interval under 18 months increases the risk of preterm premature rupture of membranes, highlighting the need to improve pregnancy spacing in the community.