BACKGROUND: Plasmodium falciparum and Plasmodium vivax are coendemic in Ethiopia, with different proportion in different settings. Microscopy is the diagnostic tool in Ethiopian health centres. Accurate species-specific diagnosis is vital for appropriate treatment of cases to interrupt its transmission. Therefore, this study assessed the status of species-specific misdiagnosis by microscope compared with polymerase chain reaction (PCR). METHODS: A health facility based cross-sectional study was conducted from November 2019 to January 2020 in Kolla Shelle Health centre, Arba Minch Zuria district. The study population were suspected malaria cases, who visited the health centre for a diagnosis and treatment. Consecutive microscopy positive cases as well as a sample of microscopically negative cases were included for molecular analysis by polymerase chain reaction (PCR). RESULTS: 254 microscopically negative and 193 microscopically positive malaria suspects were included. Of the 193 malaria positive cases, 46.1% [95% confidence interval (CI) 38.9-53.4] (89/193) were P. falciparum infection, 52.3% (95% CI 45.0-59.5) (101/193) were P. vivax infection, and 1.6% (3/193) had mixed infection of P. falciparum and P. vivax. Of the microscopically positive cases of P. falciparum, 3.4% (3/89) were P. vivax and 11.2% (10/89) were mixed infections with P. falciparum and P. vivax and a single case was negative molecularly. Similarly, of the microscopically positive P. vivax cases, 5.9% (6/101) were P. falciparum and 1% (1/101) was mixed infection. Single case was negative by molecular technique. Of the 254 microscopically negative cases, 0.8% were tested positive for P. falciparum and 2% for P. vivax by PCR. Considering molecular technique as a reference, the sensitivity of microscopy for detecting P. falciparum was 89.2% and for P. vivax, it was 91.2%. The specificity of microscopy for detecting P. falciparum was 96.1% and for P. vivax, it was 97.7%. However, the sensitivity of microscopy in detecting mixed infection of P. falciparum and P. vivax was low (8.3%). CONCLUSION: There were cases left untreated or inappropriately treated due to the species misidentification. Therefore, to minimize this problem, the gaps in the microscopic-based malaria diagnosis should be identified. It is recommended to regularly monitor the competency of malaria microscopists in the study area to improve species identification and diagnosis accuracy.