Groundwater is a pivotal natural resource in and around Arba Minch Town (AMT), Ethiopia. It has become a necessary resource over the past years due to the increase in its usage for drinking, irrigation, and industrial uses. Therefore, a hydro-chemical characterization and assessment of groundwater quality in the AMT was carried out using GIS, Groundwater Quality Index (GWQI), and multivariate statistical methods (MSM). This research attempted to identify the concentrations and spatial dispersal of various ions, the appropriateness of groundwater, and the hydrochemical processes that contribute to its chemistry. During both seasons, the major cations and anions in the groundwater are in the following order: Ca2+ > Na+ > Mg2+ > K+; HCO3 > SO4 > Cl− > NO3 > F-. Four principal components (PC1, PC2, PC3, and PC4) accounted for 86.65% and 85.36% of the total variance during the dry and wet seasons, respectively. For both seasons, Q-mode cluster analysis identified four significant clusters in the groundwater samples. The GWQI revealed that a majority of the samples fall into the good to excellent category of water, implying that the water is safe to drink and use for other domestic purposes. Consequently, based on the Sodium Adsorption Ratio (SAR), Sodium Percentage (Na+ %), and Residual Sodium Carbonate (RSC) values of groundwater samples, analysis shows that most groundwater samples are appropriate for agrarian. The Ca2+–Mg2+–HCO3 water type is the dominant groundwater type, indicating temporary hardness. The interaction of rock water and evaporation processes are the two major natural mechanisms that control the chemistry of groundwater. This study will help planners better manage groundwater resources in this town in the future.