Introduction: Highly active antiretroviral therapy (HAART) restores immune function and reduces human immunodeficiency virus (HIV)-related adverse outcomes. However, treatment failure erodes this advantage and leads to an increased morbidity and compromised quality of life in HIV patients. The purpose of this study was to assess prevalence of first-line antiretroviral treatment failure and factor associated with treatment failure following antiretroviral therapy at the Shashemene Referral Hospital. Material and methods: This was a retrospective cross-sectional study with first-line HAART failure card review and it was carried out at HAART clinic of the Shashemene Referral Hospital. The study included 69 HIV-positive patients who had started HAART between 2013 and January 6, 2016. Results: The study showed that out of 69 study participants, 10 (14.5%) patients developed treatment failure, and among them, an immunologic failure occurred in 6 patients (60%), virologic failure was detected in 2 cases (20%), and clinical failure occurred in 1 patient (10%). Using multivariate logistic regression analysis, advanced World Health Organization (WHO) stage four (AOR = 47.6; 95% CI: 2.3-552.4) and good adherence (AOR = 0.094; 95% CI: 0.014-0.610) had significant negative association with treatment failure. Conclusions: The overall first-line treatment failure rate was 14.5% (10 patients). Prevention and control of the development of advanced World Health Organization (WHO) stage, improving adherence, promotion of HAART initiation at active functional status and higher CD4 count, prevention of multiple or many opportunistic infections were the primary conclusions of our study.