Background: In some countries the use of Khat is widespread. The use or misuse of Khat is increasingly prevalent in Ethiopia. College and university students consume Khat to get mental alertness and to work hard in their academic endeavours. Most of the studies concerning Khat chewing were done on community-based studies and high school-based as well as psychiatric effects of Khat: less was done among university students. Objective: The study was aimed to assess the prevalence and associated factors of Khat chewing among undergraduate Adama University students. Methodology: A cross-sectional study using self-administered questionnaire was conducted on population sample size determined by using single population proportion formula in January 2012. By using multi-stage sampling technique followed by simple random sampling, one department was selected from each school. Then, by simple random sampling, the sampled students were selected proportionally to their year of study and class size. Questions regarding demographic variables, academic and environmental factors were included in the survey. Data quality was controlled by pre-test, supervision, translation and training data collectors. Completed data were coded and entering into EPI info version 3.5.1 and analyzed by SPSS version 16. Odds ratio with 95% CI and multiple logistic regression analysis were used. Results: A total of 728 students participated giving a response rate of 95.3%. The lifetime and current prevalence of Khat chewing were found to be 27.7% and 20.7% respectively. Being male (AOR = 1.95; 95% CI 1.10 - 3.47), monthly pocket money (AOR = 1.52; 95% CI = 1.01 - 2.28), family history of Khat chewing (AOR = 1.72; 95% CI = 1.14 - 2.59) and friend chewing Khat (AOR = 1.70; 95% CI = 1.12 - 2.58) were associated factors for Khat chewing (p < 0.05). Conclusion and Recommendation: The prevalence of Khat chewing among Adama University students was high compared to other studies done in similar settings. Therefore, there is a need for early intervention that targets university students to reduce impact of peer pressure, family history of Khat chewing and proper management of money. To realize this involvement and participation of policy makers, ministry of education, universities and parents are mandatory.