Aflatoxin M1 (AFM1) or milk toxin is a hydroxilated metabolite of aflatoxin B1 from a contaminated feed. This study investigated the occurrence of AFM1 in milk and milk products collected from Bishoftu town (one of the major milk producing place in Ethiopia). Milk (n = 108), cheese (82), yogurt (93) and butter (82) samples were collected both from industrial and local producers. From the 365 samples analyzed, 361 samples were positive for AFM1. Maximum value was in cottage cheese with a concentration of 5.580 ± 0.08 μg/kg and minimum was in butter of zero (Not detected) value. Comparing the mean level of AFM1 between the four dairy products; milk > cottage cheese > butter > yogurt. Considering the average daily intake of AFM1 obtained in this study and the current average milk consumption rate (19 L/year) in Ethiopian consumers, only adults are in the safe zone with TDI (Tolerable Daily Intake) of AFM1 (0.0002 μg/kg of body weight). But infants and young children might be more exposed to the toxin due to their higher consumption of milk and milk products in their diet.