Background: Malnutrition is alarmingly decreasing the two-decade, but still major public health problems in the world, especially in developing countries, include Ethiopia. Stunning and wasting rates are dropping, but 159 million and 50 million children around the world still affected respectively. Malnutrition in Ethiopia in the form of stunting, underweight and wasting were as 44%, 29% and 10% and Oromia national region state 44.1%, 39.6% and 12.5%, respectively under five children. Objective: the aim of this study is to assess magnitude of malnutrition and associated factors among under-five children in Shashamene Referral Hospital, Oromia Ethiopia, 2016. Method: Facility based cross-sectional design was conducted. Systematic random sampling technique was used. After data collection SPSS 20.0 was employed for data entry, organize and analysis. Odd ratio and p value were computed to identify the presence and strength of association and <0.05 stastical significance was declared. Results: The magnitude of stunting, underweight and wasting were about 38.3%, 49.2% and 25.2 %, respectively. Educational status of mother and child age was significantly associated with stunting. Complementary food was associated with underweight and occupation of mother was associated with wasting. Conclusion and recommendation: This study revealed that malnutrition was high than the regional and national figures found from Ethiopian Demographic Health Survey 2011. Community based nutrition program need to be established to tackle the problem of malnutrition at community level depending on the severity of malnutrition identified in this study. Nutrition education by health extension works need to be strengthening to improving the feeding practice of parents on appropriate children feeding.