This research aimed to assess the levels of AFM1 and evaluate the associated health risks from raw milk samples collected randomly from four selected towns. Ninety (n = 90) raw milk samples were randomly collected from smallholder dairy farmers in the North Shewa Zone, with 23 samples from Fiche, 23 from G/Gurracha, 22 from Dagem, and 22 from Sululta. The concentrations of AFM1 in the raw milk samples were determined using high-performance liquid chromatography with fluorescence detection (HPLC-FLD) after purification via an immunoaffinity column (IAC). AFM1 was detected in 76 (84.4%) raw milk samples, with 53 (58.9%) exceeding the maximum permissible limit established by the European Commission, 0.0500 µg/L. The highest AFM1 content was 2.00 µg/L and the lowest was 0.0100 µg/L. Additionally, risk assessment was performed using the margin of exposure (MOE), estimated daily intake (EDI), hazard index (HI), and cancer risk (CR). The results indicated that based on the average contamination levels of the milk during the study period and typical consumption rates, the average EDI of the adult population to AFM1 ranged from 0.374 to 0.852 ng/kg body weight (bw) per day. The calculated MOE values were less than 10,000, indicating potential health concerns. The mean HI value determined in this study was 2.70, which also suggests adverse health effects. Furthermore, the estimated risk of developing hepatocellular carcinoma (HCC) due to AFM1 exposure from milk consumption among adults was calculated to be 0.00170 cases per 100 000 individuals yearly. This finding indicates a significant risk of HCC, which justifies its continuous monitoring of dairy products throughout the entire supply chain, from production to consumption. Furthermore, our research highlights the need for further investigation into the risks posed by AFM1 in children, given their higher levels of milk consumption relative to adults.