Background Drinking water quality is the main concern because in developing countries like Ethiopia, where contaminated water was one of the main vehicles for the transmission of water borne diseases. Therefore, the objective of this research was to assess the physicochemical & bacteriological water quality in Asella town, Ethiopia. Methods A cross-sectional study was carried out from November, 2015 to April, 2016 G.C. 8 liter composite water samples in plastic bottles packed cold chain had been taken by the investigator from eight different sites with two round totally 192 parameters were analyzed. A standard instrument like AAS for heavy metal analysis was using APAH procedures. Statistical analysis was done by the use of software for data entry Epi info 7 & Minitab 19.2. Results The first round of laboratory had showed that mean± SD TH 59.5± 7.4 mg/L, COD 30± 25.8mg/L, calcium 15± 4.3 mg/L, magnesium 5.3± 0.9 mg/L, BOD5 3± 2.6 mg/L and Nitrate 1.5± 0.1mg/L. The result of microbial analysis was 180CFU/100ml for TF & FC, 40CFU/100ml was E.coli detected in the first study site. The second round physical analysis had showed that municipality water was colourles, odourles & tasteless. But the Mean ± SD turbidity was 32.6± 63.4 mg/L. The mean± SD pH 4.5±0.8,EC 101.8±23.1,TH 24± 2.5 mg/L, calcium 6.9± 0.8 mg/L, magnesium 1. ± 0.6 mg/L, Fluoride 0.4± 0.2mg/L, aluminum 0.3± 0.2 mg/L, DO 4.6± 1.2 mg/L, nitrate 3.3± 2.5 mg/L, nitrite 0.9± 2/5 mg/L, zinc 0.3± 0.4 mg/L, CO32- 7. ± 6 mg/l, chloride 6± 1.3 mg/L, alkalinity 6± 4.9 mg/L, total solid 96± 50.3 mg/L, TDS 62± 14.8 mg/L, sodium 3.9± 2.4 mg/L, potassium 1.7± 0.1 mg/L, iron 0. ± 1mg/L and ammonia 0.9± 0.3 mg/L. There was strong pair wise statistical correlation among water quality parameters with p value < 0.05 Conclusions The water quality analysis was below the limit of WHO standard, but some chemical, turbidity & microbes need a critical attention. So, efficient water treatment must be monitored by the municipality & homemade water treatment by urban community