Background: Midwifery support and care led by midwives is the most appropriate strategy to improve maternal and newborn health. The Government of Ethiopia has recently improved the availability of midwives by scaling up pre-service education. However, the extent to which graduating students acquire core competencies for safe and effective practice is not known. The purpose of this study was to evaluate the quality of midwifery education by assessing the competence of graduating midwifery students. Methods: We conducted a cross-sectional study to assess the competence of students who completed basic midwifery education in Ethiopia in 2013. We interviewed students to obtain their perceptions of the sufficiency and quality of teachers and educational resources and processes. We assessed achievement of essential midwifery competencies through direct observation, using a 10-station Objective Structured Clinical Examination (OSCE). We calculated average percentage scores of performance for each station and an average summary score for all stations. Chi-square test, independent sample t test, and linear regression analysis were used to assess the statistical significance of differences and associations. Results: We assessed 484 graduating students from 25 public training institutions. Majority of students rated the learning environment unfavorably on 8 out of 10 questions. Only 32 % of students managed 20 or more births during training, and just 6 % managed 40 or more births. Students' overall average competence score was 51.8 %; scores ranged from 32.2 % for manual vacuum aspiration to 69.4 % for active management of the third stage of labor. Male gender, reporting sufficient clinical experience, and managing greater numbers of births during training were significant predictors of higher competence scores. Conclusions: The quality of pre-service midwifery education needs to be improved, including strengthening of the learning environment and quality assurance systems. In-service training and mentoring to fill competence gaps of new graduates is also essential.