BACKGROUND Although depression and anxiety disorders are very common in people with epilepsy; there are no studies that assessed the magnitude and associated factors among epileptic people in Ethiopia. Therefore, this study determined prevalence and associated factors of depression and anxiety disorders in people with epilepsy. METHODS An institution based cross-sectional study was conducted from April to May, 2013, among 423 people with epilepsy from the outpatient department of Amanuel Mental Specialized Hospital. Depression and anxiety were assessed using the Hospital Anxiety and Depression Scale. Logistic regression analysis was used to assess predictors of depression and anxiety. RESULTS The prevalence of anxiety and depression among epileptic people were 33.5 and 32.8%, respectively. Monthly income, frequency of seizure and side effects of anti convulsants were found to be significantly associated with both depression and anxiety. Being divorced/widowed was associated with anxiety while using poly-therapy of anti convulsants, perceived stigma, and inability to read or write were associated with depression. CONCLUSIONS The prevalence of co-morbid anxiety and depression was found to be high among people with epilepsy. Early identification of co-morbid depression and anxiety in people with epilepsy and managing epilepsy to become seizure free should be of great concern for health care providers.