BACKGROUND: As many as 60-80% of people in developing countries first seek malaria treatment at private rather than public health facilities, but the technical quality of private services is questionable. Before commencing a Public Private Partnership for malaria, we wanted to assess the knowledge and practice of malaria diagnosis and treatment among healthcare providers (HCPs) working in Private Health Facilities (PHFs) in Ethiopia. MATERIALS AND METHODS: A facility-based cross-sectional study was conducted from April to June 2012. Quantitative and qualitative data were collected, entered and analysed using SPSS version 20. We enrolled 264 HCPs from 264 PHFs in malaria-endemic towns. RESULTS: The majority (84.5%) of the HCPs were males, 106 (40%) were nurses and 135 (51.0%) had practiced for more than seven years. The knowledge of HCPs about the malaria programme was scored (from 1-5), and the mean was 2.52 (95% CI: 2.32-2.72), with 40.5% of the HCPs scoring above the mean. The majority knew the recommended treatment following confirmed diagnosis (91.3% for , 88.6% for ). 73.1% of suspected cases were investigated for parasitological diagnosis. The malaria slide positivity rate was 37.6%; however, only 60.0% of the confirmed cases were treated for malaria. Presumptive malaria treatment was offered to about 40% of patients. The adherence rate of HCPs towards prescribing the recommended first line drugs was 44.2% for chloroquine, 47.9% for ACTs and 77.9% for quinine. CONCLUSIONS: The study revealed that in Ethiopia HCPs in private practices have major gaps in knowledge and practice related to malaria case management. Therefore, provision of malaria diagnosis and case management training, supportive supervision and job aids is recommended for private healthcare providers, especially for nurses and for younger healthcare professionals.