The key to the effective management of healthcare wastes is the segregation of the waste at the point of generation; no matter what final strategy for the treatment and disposal of wastes is selected, it is critical that waste streams are separated. The aim of the study is to assess the practice of healthcare waste segregation and associated factors among healthcare workers at public and private hospitals in Dire Dawa, Eastern Ethiopia. An institution-based cross-sectional study was conducted among 280 healthcare workers from public and private hospitals. Data were collected through self-administered structured questionnaires and observation checklists. Bivariate and multivariable logistic regression were used to identify factors associated with the practice of healthcare workers using SPSS (Statistical Package for Social Sciences) version 25. This study showed that 56.4% (95% CI: 43.7-60.2) study participants had good healthcare waste segregation practices. Working in a public hospital (AOR = 0.09, 95% CI: (0.03-0.23)), working less than 40 hours a week (AOR = 4.28, 95% CI: (2.11-8.68)), adequate knowledge on healthcare waste management (AOR = 2.42, 95% CI: (1.27-4.61)), ever trained on waste management ((AOR = 2.74, 95% CI: (1.15-6.53)), the presence of guidelines, instructive posters on healthcare waste segregation ((AOR = 8.21, 95% CI: (3.84-17.55)), and availability of color-coded waste bins ((AOR = 9.53, 95% CI: (4.52-20.10)) were factors significantly associated with healthcare waste segregation practices. The study revealed that healthcare waste segregation practices were unacceptably poor. It is very crucial to address the identified factors through ongoing enforcement of healthcare waste management rules and regulations, by providing training, instructive posters around the work area, and making color-coded bins available.