BACKGROUND: Peer-led education interventions are assumed to be an effective means of increasing contraceptive utilization and demand in adolescents. However evidence is lacking on whether peer-led education is effective in promoting the demand for and use of contraceptives in adolescent girls, especially in resource-limited settings. OBJECTIVE: The present study evaluated the effectiveness of peer-led education interventions in improving contraceptive use, unmet needs, and demand among sexually active secondary school adolescent girls in Gedeo Zone, South Ethiopia. METHODS: A single-blinded cluster randomised controlled trial study was performed in six randomly selected secondary schools in the Gedeo Zone, southern Ethiopia. A total of 224 participants were recruited and randomly assigned to the intervention and control groups. The intervention group received peer-led education intervention for six months. A pre-tested and validated questionnaire was used to measure contraceptive use, unmet need, and contraceptive demand. A generalised estimating equation (GEE) model was used to examine the effectiveness of the intervention. RESULT: After six months of intervention, the Differences-in-difference in contraceptive use, unmet need, and contraceptive demand between the intervention and control groups were 25.1%, 7.4%, and 17.7%, respectively. There was a statistically significant difference in contraceptive use [AOR = 8.7, 95% CI: (3.66, 20.83), unmet need for contraceptives [AOR = 6.2, 95% CI: (1.61, 24.36)] and contraceptive demand [AOR = 6.1, 95% CI: (2.43, 15.11)] between the intervention and control groups. CONCLUSIONS: School-based peer education intervention effectively improved contraceptive use and unmet needs in a low-resource setting and created demand in sexually active adolescent girls. These results support the potential utility of this approach in similar settings for the promotion of contraception use and demand.