Background: The high rate of unemployment among young adults (aged 18 to 30 years) is a public health concern. The risk of mental health problems like depression is higher among the unemployed than among the employed. However, little is known about the prevalence and determinants of depression among unemployed young adults in Ethiopia. Hence, this study is aimed to assess the prevalence and determinant factors of depression among unemployed young adults in Gedeo zone, Southern Ethiopia. Methods: Community based cross sectional study design was conducted among 1419 unemployed young adults in Gedeo zone, Southern Ethiopia from May to July, 2019. Systematic random sampling technique was used to select study participants. Data on socio-demographic characteristics of unemployed young adults was collected by using structured questionnaire and presence of depression was assessed by Patient Health Questionnaire-9 (PHQ-9). Data was coded and entered into Epi-Data version 3.1 and analyzed by SPSS version 20. A multivariable logistic regression analysis was carried out to identify factors associated with depression, and variables with p-values < 0.05 were considered as statistically significant. The strength of the association was presented by adjusted odds ratio with their 95% confidence interval. Result: The overall prevalence of depression among unemployed young adults in the present study was 30.9% (95% CI: 28.4%, 33.1%). Of the total study participants with depression, 249(17.5%) had mild depression, 158(11.1%) had moderate depression, and 32(2.3%) had severe depression. Being male (AOR=1.40, 95%CI: 1.10, 1.80), long duration of unemployment (≥1years) (AOR=1.56, 95%CI: 1.21, 1.99), low self-esteem (AOR=1.32, 95%CI: 1.03, 1.68), poor social support (AOR=1.98, 95%CI: 1.34, 2.93), and current alcohol use (AOR=1.86, 95%CI: 1.33, 2.59) were significantly associated with depression among unemployed young adults. Conclusion : Our study revealed a high prevalence of depression among unemployed young adults, with three out of ten unemployed young adults having significant depression. Being male, long duration of unemployment, low self-esteem, poor social support, and current alcohol use were statistically significant with depression. Therefore, our study suggest that Policy makers, program planners, and other concerned bodies should establish appropriate strategy for prevention, early detection and management of depression among unemployed young adults.