Effective and enforceable national regulations describing the manufacture and (re)packaging, export and import, distribution and storage, supply and sale, information and pharmaco-vigilance of medicines are required to consistently ensure optimal patient benefit. Expansion of pharmaceutical industries in many countries with advancement in transport technologies facilitated not only trade of genuine pharmaceutical products but also the circulation of poor quality medicines across the globe. In Ethiopia, even though "The Pharmacists and Druggists Proclamation No 43/1942" was used to regulate both the professions and the facilities where they were practiced, comprehensive regulation of the pharmaceutical market was introduced in 1964 by a regulation called "Pharmacy Regulation No. 288/ 1964". This legislation formed the legal basis for official establishment of drug regulation in the history of Ethiopia, enabling the regulation of the practice of pharmacists, druggists and pharmacy technicians; manufacturing, distribution, and sale of medicines. In June 1999, a new regulation called the "Drug Administration and Control Proclamation No. 176/1999" repealed most parts of the regulation 288/1964. The law established an independent Drug Administration and Control Authority (DACA) with further mandate of setting standards of competence for licensing institutions/facilities. DACA was re-structured as Food, Medicine and Health Care Administration and Control Authority (EFMHACA) of Ethiopia by the "Proclamation No. 661/2009" in 2010 bearing additional responsibilities like regulation of food, health care personnel and settings. The mere existence of this legal framework does not guarantee complete absence of illegal, substandard and falsified products as well as illegal establishments in the pharmaceutical chain. Therefore, the objective of the research is to assess the pharmaceutical regulatory system in Ethiopia and to reveal possible reasons for deficiencies in the pharmaceutical chain. An archival review, an in-depth interview of key informants and an institutions-based cross-sectional survey study were conducted during March to April 2013. The comprehensiveness of the pharmaceutical law to protect public health relative to three selected African countries (South Africa, Tanzania and Uganda) and European Union, and implementation was assessed. The study revealed that Ethiopia does have a written national drug policy upon which the Medicines Regulatory Proclamation 661/2009 is based. According to this proclamation, the Ethiopian The Food, Medicines and Healthcare Administration and Control Authority is mandated to execute the regulatory activities as per the council of ministers regulation 189/2010. The legal framework for pharmaceutical regulation of Ethiopia was founded to fulfill all the medicines regulatory functions potentially enabling to combat illegal, substandard and falsified medicines and illegal establishments. Moreover, all the key informants witnessed that the government is commited and proclamation 661/2009 is comprehensive, but they stressed the compelling need of regulatory tools for effective implementation. From the institution-based cross-sectional study, it was revealed that there exist illegal sources formedicine in the pharmaceutical market. The main reasons for their existence were regulatory factors including weak regulatory enforcement (64.5%), lack of informal market control (60.8%), weak port control (50.0%), and poor cooperation between executive bodies (39.6%); and resource constraint (27.8%), which is an institutional factor. From legislative point of view, the medicines regulatory framework in Ethiopia fulfils all regulatory functions required for effective medicines regulation. However, the existence of the legislation by its own is not a guarantee to prevent the existence of unauthorized/illegal medicine sources since this requires effective implementation of the legislation, which is in fact affected by the governments political commitment, resource and intergovernmental cooperation.