Background Globally, in every three preschool children one is affected by malnutrition. In Ethiopia, child undernutrition continues to be a serious public health problem. Data are scarce, especially in 24-59 months age children. We aimed at estimating under nutrition and its associated factors among children 24–59 months age in Aykel Town, Northwest Ethiopia. Methods A community based cross-sectional study was conducted among children aged 24–59 months in Aykel Town from January to February 2017. A total of 416 children were included in to the study using a systematic random sampling technique. Data were collected by interview and anthropometric measurements. Multivariable analysis was performed to identify the predictors of stunting, wasting and underweight. Results The prevalence of stunting, wasting and underweight were 28.4, 10 and 13.5%, respectively. Children from low birth order; 1 st (AOR = 8.60, 95%CI: 2.40, 3.70) and 2nd -4th (AOR = 5.80, 95%CI: 1.80, 18.90), from large family size (AOR = 3.67, 95%CI: 1.92, 7.00), and had meal frequency < 3/day (AOR = 5.09, 95%CI: 2.96, 8.74) were at a higher risk of stunting. Children who had not fed on cow milk (AOR = 5.50, 95%CI: 2.30, 13.00), and from mothers who had poor hand washing practice (AOR = 11.00, 95%CI: 4.30, 27.9) were more likely to be wasted. Children who had not fed on cow milk (AOR = 2.90, 95%CI: 1.40, 6.00), breast fed for less than 24 months (AOR = 2.60, 95%CI: 1.35, 5.00), consumed foods from less than four food groups (AOR = 6.30, 95%CI: 1.70, 23.00), and were from mothers’ who had poor hand washing practice (AOR = 2.50, 95%CI: 1.30, 4.70) had higher odds of being underweight. Conclusion Stunting, wasting and underweight are high among children aged 24–59 months in Aykel Town. Poor child feeding and maternal hygienic practices were identified as risk factors of undernutrition. Educating mothers/care givers on the advantages of proper child feeding and maintaining hygienic practices at critical times is valuable in improving the nutritional status of children.