This paper examines the determinants of total factor productivity (TFP hereafter) using a panel of firms in Ethiopia. The data is obtained from the annual census data of medium and large scale manufacturing firms in Ethiopia which is collected by the Central Statistical Service (CSS). we use a classic model of Levinsohn and Petrin to recover an estimate of TFP and then run a separate regression using fixed effect, random effect and SYS-GMM models to assess the determinants of firm-level TFP. The results reveal that openness to the international market; skill intensity; private ownership and employee incentives have statistically significant and positive impact on firm-level TFP. On the other hand, bank loan has a significant and negative effect on firm-level TFP. Thus, policies that encourage openness and privatization enhance productivity. On the other hand, revising the bank lending approaches so as to reduce the effect of adverse selection is crucial.