A retrospective study and active abattoir survey were conducted from December 2009 to April 2010 to determine the major causes of organs and carcasses condemnation and to estimate the associated direct financial loss at Luna Export Abattoir, Central Ethiopia. The active abattoir survey was conducted on 674 goats and 451 sheep (n=1125) and three years (2007, 2008 and 2009), retrospective data of 718,395 sheep and goats were also collected. From the retrospective data it was observed that liver was the most frequently condemned organ with condemnation rate of 32.4%, 46.7% and 70.5%, respectively. The major causes of condemnation for liver, lung, heart, kidneys and brain were cirrhosis (12.3%, 17.0% and 12.8%), pneumonia (6.6%, 11.6% and 12.5%), pericarditis (0.6%, 0.8% and 0.4%), nephritis (0.6%, 0.8% and 1.2%) and abscess (0.005%, 0.007% and 0.012%), respectively. Consequently, the overall direct financial loss from organs and carcass condemnation during the three years was estimated to be 22,993,591 Ethiopian birr (ETB) or 1,323,257 United State Dollar (USD). On the other hand, detailed post mortem inspection of liver, heart, kidneys, tongue, brain and carcass during the active abattoir survey revealed that higher losses were caused mainly due to cirrhosis (89.3kg, 2998ETB), pericarditis (5.4kg, 308ETB), faulty evisceration (8.4kg, 472ETB), calcification (8.4kg, 469ETB) and Coenurus cerebralis (4.3kg, 243ETB) and poor carcass condition (bonny carcass) (1390kg, 78,500ETB), respectively. Other causes of condemnation were also recorded and totally, about 110,361ETB (6351USD) was lost only from organs and carcasses condemnation during the active abattoir survey. In conclusion, this study identified the major causes of organs and carcass condemnation in Luna Export Abattoir and estimated the associated direct financial losses.