AbstractQuality water is essential to people's health and social and economic well‐being. Evaluation of the quality of the water sources provides benchmark data on quality status and insights into the development of further protective measures. A laboratory‐based cross‐sectional study design was conducted in the diarrheal hotspot area of the North Shewa zone. The contamination risks of water sources were assessed using the World Health Organization (WHO) sanitary inspection checklist. A grab water sample was collected from 138 multi‐village drinking water sources according to WHO guidelines. The collected sample was processed for physicochemical and microbiological analysis. Data were recorded and analyzed using SPSS version 25 software. The inspection survey indicated there was no proper handling of the water sources. The water temperature range was between 7 and 32°C, while the turbidity values ranged from 1.8 to 6 NTU. Electrical conductivity, pH, and total dissolved solutes were 100% within the acceptable limits of WHO and the Ethiopian Ministry of Health (EMoH) water quality guidelines. However, only (77/138, 55.79%) and (101/138, 73.29%) drinking water sources were within the acceptable range of temperature and turbidity, respectively. The mean bacteriological counts in multi‐village drinking water sources were a mean value of 72.14, 29.78, 21.09, and 15.64 for TMC, TCC, FC, and FSC, respectively. A total of (19/138, 13.8%) drinking water samples were positive for total coliform (Tc) and/or fecal coliforms (Fc). The remaining (119/138, 86.2%) water samples were bacteriologically potable. The physicochemical quality of the drinking water sources was consistent with WHO and national water quality standards, except that turbidity exceeded the acceptable range. The results also showed that some water sources were contaminated with fecal and total coliform, which was supported by an inspection survey in which most water sources were poorly protected. These research findings can serve as a valuable evidence base for informing policy decisions and guiding practical interventions aimed at ensuring access to safe drinking water in diarrheal hotspot areas.