Fecal contamination of drinking water is a major problem in rural communities of Ethiopia, where surface water sources like rivers, wells, and lakes are used for drinking. In spite of these problems, few data exist on the microbiological safety of water sources in these settings. Therefore, the aim of this study was to investigate the microbiological safety of drinking water from the sources and households in selected communities of Shashemane rural district, Ethiopia. A descriptive analytic study was used to examine the bacteriological quality of drinking water from sources and household containers. Data on water collection and storage practices were collected using structured questionnaires. Water samples were collected according to the WHO Guidelines for drinking water quality assessment from surface and ground water sources which are used directly for drinking purpose in the community. Water samples were examined for total coliforms and fecal coliforms using the most probable number methods. The detection of Escherichia coli, Salmonella, Shigella, and Vibrio cholerae were assessed by biochemical tests. Total coliforms were detected in higher proportion in all water source samples. Fecal coliform contamination was detected in all water sources, except in hand pipes. E. coli, Salmonella and Shigella species were detected in water samples from river and wells. Total coliforms, fecal coliforms, E. coli and Salmonella spp. were also detected in water samples from households. The bacteriological load of the sampled water from source and households was found to be higher than the maximum value set for drinking water. Therefore, enabling the community access to potable water through encouraging construction of toilets, creating proper domestic and animal waste disposal system and rendering health education and sanitation practices for the community is recommended.