Lumpy skin disease (LSD) is an acute or inapparent viral disease of cattle which is endemic in many African and Middle East countries. LSD is one of the major transboundary livestock diseases in Ethiopia. A cross-sectional study using multistage cluster sampling was undertaken in central and north-western parts of Ethiopia with the objectives to estimate seroprevalence and to identify and quantify risk factors contributing to the occurrence of the disease. A total of 2386 cattle sera were sampled from 605 herds and 30 clusters (kebeles) located in 10 districts and tested for presence of LSD virus antibodies using virus neutralization test. All the serum samples were collected from cattle having no history of LSD vaccination. The overall animal level and herd level apparent seroprevalences were 25.4% (95% CI: 23.7–27.2) and 48.9% (95% CI: 44.9-52.9), respectively and varied significantly between districts. The true animal level and herd level prevalences were estimated as 26.5% (95% CI: 24.7–28.3) and 52.6% (95% CI: 48.3–56.9), respectively. At animal level, adult age (OR = 2.44 (95% CI: 1.67–3.55) compared to calf), contact with other animals (OR = 0.41 (95% CI: 0.23-0.74), compared to no contact) and presence of water bodies (OR = 1.61 (95% CI: 1.03–2.52), compared to no such bodies) were identified as the most important risk factors in relation to testing LSD positive. The putative risk factors altitude, breed, sex, and presence of animal trade route showed no significant association with LSD sero-status. Generally, cattle population with many adult animals and that live in wet areas are at highest risk, whereas cattle in frequent contact with other animals and animal species have lower risk, potentially due to a dilution effect of vectors.