Background: Contraceptive utilization is a guarantee to avert unwanted pregnancies. In Ethiopia however, more than half of the rural women have shorter birth intervals. Consequently, 17 and 8% of the births have been either mistimed (wanted at later date) or unwanted, respectively. Therefore, this study investigated modern contraceptive utilization and its predictors among rural lactating women. Methods: A community based-cross-sectional study was conducted from May 01 to June 29, 2019, in Dabat and Gondar zuria districts, northwest Ethiopia. Data from 603 lactating mother were collected through face to face interviews using a structured questionnaire. Bivariate and multivariate logistic regression analyses were fitted to identify the independent predictors of modern contraceptive utilization. Results: The overall prevalence of modern contraceptive (MC) utilization rate was 45.8% [95% CI: 38.01, 53.59]. The contraceptive method mix was dominated by Depo-Provera (39.8%) followed by implants (4.8%). The odds of utilization of contraceptive were 5.58 times higher among mothers of children with fully immunized [AOR = 5.58, 95% CI: 3.45, 9.01] compared to mothers whose children were vaccinated partially or not at all. Mothers who received antenatal [AOR = 1.74, 95% CI: 1.13, 4.43] and postnatal care [AOR = 2.02, 95%CI: 1.24, 2.91) were 1.74 and 2.02 folds more likely to utilize modern contraceptives than mothers who did not receive such care, respectively.