The Ethiopian Rift Valley (ERV) is characterized by arid and semi-arid climate with groundwater as the most important water resource used for drinking and irrigation purposes. However, in the region, people are suffering from severe water scarcity exacerbated by climate effect. Besides water availability, endemic water quality issues are critical and affect the suitability of the water and human health risks. The present study evaluates the suitability of groundwater for drinking and agricultural purposes in the Ziway Lake Basin (ZLB) of the ERV. Groundwater used for drinking contains multiple inorganic contaminants in levels that surpass the World Health Organization recommended limits. The most frequent of these violations were for Na+, K+, HCO3-, F- and few samples for Mn, As, U, Pb and Mo. The modeled Drinking Water Quality Index (DWQI) values of the groundwater show wide variation ranging from 12.7 (Excellent category) to 714 (Unsuitable category) with mean value of 94. Likewise, Irrigation Water Quality Index (IWQI) computed by considering EC, SAR, Na%, RSC and PI of the groundwater varies from 13.2 to 520 with a mean value of 106. Both DWQI and IWQI values suggest that groundwater is generally of Excellent quality for drinking and irrigation use in the headwater regions of the ZLB and progressively becomes extremely Unsuitable toward the rift floor. The exceptionally high DWQI values to the west of Lake Ziway is mainly associated with the co-occurrence of multiple toxic elements from a groundwater from the Quaternary sediments and rhyolitic volcanic aquifers.