Inadequate improved water supply and sanitation, particularly in refugee camps contribute to the spread of infectious diseases. The study objective was to assess determinants of microbiological quality of drinking water in refugee camps and host communities in Gambella Region, Ethiopia. A cross-sectional study was conducted from September to December 2016 based on structured questionnaire-based interviews and testing household water using the portable Potatest+ water quality testing kit. Data were analyzed and P values <0.05 with 95% confidence interval (CI) were considered statistically significant. Results showed there were significant differences in fecal coliform count (P value = 0.009) and free residual chlorine concentration (P value = 0.01) between the source and stored water samples. Surface water source, water shortages in the previous month, and unavailability of free residual chlorine and caregivers without formal education were the main determinants of microbiological quality of stored water. Stored water was contaminated in many households in both the refugee and host communities. Designing and implementing appropriate community education and effective hygiene promotion programs are essential in improving community knowledge of water contamination and reducing diarrhea prevalence among under-five children in refugee camps and host communities in Gambela Region.