The aim of this study was to assess the incidence and nature of adverse drug events (ADEs) in hospitalized children at a teaching hospital in Ethiopia. We studied 600 children hospitalized at Jimma University Specialized Hospital between 1 February and 1 May 2011. Fifty-eight ADEs were identified, with an incidence of 9.2 per 100 admissions, 1.7 per 1000 medication doses and 9.4 per 1000 patient-days. One-third of ADEs were preventable; 91% caused temporary harms and 9% resulted in permanent harm/death. A strategy to prevent ADEs, including education of nurses and physicians, is of paramount importance.