Introduction Unwanted pregnancy and sexually transmitted diseases are the major problems in street women because of the non-utilization of modern contraceptives. To the best of our knowledge, no studies have assessed the utilization of modern contraceptives and associated factors among street women in the study area. Therefore, this study aimed to determine the utilization of modern contraceptives and its associated factors among street women. Methods A community-based cross-sectional study using mixed methods was conducted from February 16th to April 10, 2021, among all censuses and 615 reproductive-aged street women. Face-to-face and in-depth interviews were employed to generate quantitative and qualitative data, respectively. Binary logistic regression was used to analyze the association between modern contraceptive utilization and independent variables with statistical significance set at p < 0.05. Qualitative data were analyzed using a thematic approach. Results Approximately half 279 (50.3%) (95% CI: 46.3%, 54.4%) street women currently used modern contraceptives. Factors significantly associated were women aged 25–34 years [AOR = 5.5, 95% CI: 1.2–24], distance from a nearby health facility within 30 min [AOR = 9.2, 95% CI: 1.6–51], getting advice from health professionals [AOR = 14.3; 95% CI = 5.3–38.4], discussed with their sexual partners about the utilization of modern contraceptives [AOR = 6.2, 95% CI: 2.4–16.5], a history of pregnancy [AOR = 2.7, 95% CI: 1.2–6], the desire to have a child after two years [AOR = 2.2, 95% CI: 1.1–4.7], and women who faced rape in street life [AOR = 5.4; 95% CI = 1.9–15.3]. Fear of side effects, misperceptions, and the desire to have a child are the main identified themes for the key barriers to using modern contraceptives. Conclusion The proportion of street women currently using modern contraceptives was low. Age, distance from the health facility, discussion with health professionals, discussion with sexual partners, history of pregnancy, desire time to have a child in the future, and history of rape were factors significantly associated with the use of modern contraceptives. Most of the participants’ reasons for the lack of use of modern contraceptives were fear of its side effects.