A cross-sectional study of dermatophilosis was undertaken from October 2008 to March 2009 on 3456 cattle (3181 indigenous zebu and 275 Holestien-zebu cross) with the aim of determining prevalence and associated risk factors in urban and periurban areas of Bahir Dar, north western Ethiopia. Culturing of Dermatiphilus congolensis and Giemsa staining were the techniques used. Thirty six of 3456 examined animals (1.04%) had clinical dermatophilosis. Prevalence was higher in cross bred (5.5%) than in indigenous zebu (0.7%) cattle, in male cattle (1.7%) than in female (0.8% ), in adults (1.2%) than in young (0.8%) age groups, in wet (1.6%) than in dry season (0.5%), and in cattle infested with tick (2.7%) than cattle with no tick infestation (0.4%). Statistically significant difference (p# 0.05) was observed in the prevalence between breeds of cattle, between age groups, between wet and dry seasons, and between cattle with and without tick infestation. Amblyoma variegatum was identified. The study indicated dermatophilosis is a potential determinant factor for the dairy development strategy started through cross breeding in the study area. Tick control especially on crossbred cattle is suggested to reduce the risk of dermatophilosis.