Background: Malnutrition in children is one of the most serious public health problem in Ethiopia and the highest in the world. Therefore, the objective of the study was to measure the prevalence of underweight and to study the selected factors associated with underweight among children under two years of age residing in a rural area of Western Ethiopia. Methods: A community based cross sectional study was employed from March to April 2014. A total of 593 mothers of under two children using a pre-tested, structured, interviewer administered questionnaire consisting of socio-demographic factors, maternal characteristics, feeding practices and anthropometric measurement was used to gather data. WHO Anthro software version 2.02, SPSS software version 20 was used to perform descriptive statistics, bivariate and multivariable logistic regression analyses.Results: The prevalence of underweight among under two children was 8.9%. The prevalence of underweight among children under the age of one year was 15.1%. Males (9.7%) were more malnourished than females (8.2%). As compared with children in the age group less than six months, the risk of underweight was about 2.6 times higher for children in age groups over one year (AOR=2.62; 95%CI=1.09, 6.33). Conclusion: The burden of underweight was low and some important determinant factors for underweight were age of child, birth weight, frequency of breastfeeding, health information after delivery and vitamin A-rich fruits/vegetables. Thus, efforts should be made to improve the antenatal care services, emphasis on maternal nutrition and the importance of proper infant and young child feeding practices for reducing malnutrition among under-two children.