Though important in the development of educational materials for the public, community drug use studies are rare in Ethiopia. This community based cross-sectional study was conducted in Addis Ababa between November 1995 and January 1996 to describe community's perception on drugs, identify people's various sources of modern drugs and determine factors associated with drug use. The study results show that out of the 903 persons who reported an illness in the four weeks recall period, 231 (26%) did not take any action for their illness. The reasons being mainly the perception that the illness was minor and economic inaccessibility. Regarding sources of modern drugs, the majority 398 (63%) of those who used modern drugs obtained their medications from government health institutions. Drug sharing was practiced by 156 (17%) of the respondents. In addition, 39 (6%) prematurely discontinued their treatment course and the majority did so either due to inability to comprehend the instructions or having some social entertainment. It was also found that 178 (20%) of the studied households were found hoarding drugs and the most common ones were oral antibiotics and antipyretic analgesics. In addition, gender and education were found to have an association with drug hoarding. The study also identified factors associated with household drug hoarding and drug sharing among family members or neighbours; in this respect, the former was found associated with education and gender but the latter was associated with sex, age, education and marital status. In conclusion, drug sharing among families, friends or relatives are commonly practiced in Addis Ababa community. In addition, many patients stopped taking their prescribed drugs once they started to feel better.