Cytochrome P450 1A2 metabolizes a wide range of therapeutic drugs, including several used to treat diseases common in sub-Saharan Africa. Variation in the gene (CYP1A2) has been reported to be associated with differential efficacy of therapeutic drugs and adverse drug reactions. To gain a better understanding of the extent of variation in the coding and exonflanking non-coding regions of CYP1A2, 762 chromosomes from members of five ethnic groups (Afar, Amhara, Anuak, Maale and Oromo) distributed in a rough north east to south west transect across Ethiopia were re-sequenced. Substantial variation was observed, much of which was novel. As a consequence, a diagnostic test based on previously known variation cannot predict functional variation in Ethiopians. Evidence of purifying selection acting on CYP1A2 was found and coalescent date estimates of CYP1A2 variants were old, with many pre-dating expansions of anatomically modern human out of Africa. Variants within the transcription factor 7-like 2 gene (TCF7L2), which are associated with an increased risk of type 2 diabetes (T2D), were common in multiple Ethiopian populations. TCF7L2 haplotype distribution varied among groups suggesting that T2D susceptibility may also vary, with most groups likely having a West African TCF7L2 risk for the disease and some having more of a European TCF7L2 risk. Many CYP1A2 and TCF7L2 haplotypes can be of important predictive value in the planning and provision of healthcare. These findings are not only of benefit to native Ethiopians, but are also of increasing importance in the planning of healthcare intervention in the developed world, where growing numbers of individuals with recent Ethiopian descent are living. Comparing data with those from publicly available databases it appears that Ethiopian groups display a very high level of diversity that includes most of the common variation observed elsewhere.