Numerous intertrappean beds have been reported in different sections of the Ethiopian highlands; however, their detailed paleo-sedimentological characteristics have not been fully examined. This study investigates the source rock composition, tectonic setting, degree of past weathering, paleoclimatic conditions, sediment maturity, and depositional environments of the Angot–Gazo terrestrial sediments through geological mapping, mineralogical analysis, and geochemical approaches. Two terrestrial beds, consisting of mudrock and sandstone, were identified. The sandstone is characterized by massive, medium to coarse, and poorly sorted grains that range from sub-rounded to angular shapes. Minerallogically, the sandstone comprises quartz, feldspar, and lithic fragments grains with a proportional amounts of ash material. Both mineralogical (Q–F–R) and geochemical classification plots categorize the sandstone as arkosic to lithic greywacke. Felsic volcanic rocks are the main source material for the investigated sediments, as evidenced by multiple discrimination plots (DF1 vs. DF2, V–Ni–Th∗10, La–Th–Sc, Cr/Th–Th/Sc, La/Co–Th/Co, La/Sc–Th/Co and Y/Ni–Cr/V), LREE/HREE patterns, elemental ratios, and the appearance of abundant felsic-derived lithic fragments within the sandstone. A new bivariate discriminant function plot from DF1 vs. DF2 analysis, coupled with ternary diagrams of Zr/10–Th–Sc for the studied intertrappean sediments, revealed a continental rift setting, particularly a passive continental margin. Ternary diagram of A–CN–K, binary plots of Al₂O₃/Na₂O vs. average values of weathering indices (CIA, CIW, PIA, & MIA), and SiO2 vs. Al2O3+K2O + Na2O plot demonstrate slight to moderate degree of weathering for the sandstone, and deep weathering for the mudrock under semi-arid paleoclimatic conditions. The binary schemes of SiO2/Al2O3 and Ni–TiO2 ratio, along with the significant abundance of angular to sub-angular framework grains, reflect both immaturity and initial sediment recycling. Finally, the examined sediments were deposited in freshwater under oxic conditions, as evidenced by binary plots of Sr/Ba, Th/U, U/Th, and Ni/Co.