A cross-sectional study was carried out in sheep and goats kept under extensive management system in Tullo district, Western Harerghe zone of Oromia Regional State, Ethiopia, during the period from November, 2013 to April, 2014. The main objectives of the study were to estimate the prevalence of nematode infection in small ruminants and to assess associated risk factors with its occurrence. A total of 384 fecal samples were collected from 168 sheep and 216 goats. The samples were examined using floatation technique and eggs per gram of faeces were determined. The overall prevalence for the nematode infection was 50.8% (195/384). Different nematode eggs including Strongyle (177, 46.1%), Strongyloides (35, 9.1%) and Trichuris eggs (31, 8.1%) were identified. The mean eggs per gram count showed that, 100 (56.5%) were heavily infected, 61(34.5%) were moderately infected and the remaining were lightly infected. The coproculture examination from the positive samples for strongyle eggs revealed the presence of Trichostrongylus species (sp), Haemonchus sp., Oesophagostomum sp., Cooperia sp., and Bunostomum sp. Gastrointestinal nematode parasitism is more prevalent (AOR=2.23) in sheep as compared to goats. It was also higher in animals with poor (AOR=4.54) and medium body conditions (AOR=2.02) as compared to animals with good body conditions. However, there was no statistically significant association between the occurrence of the infection and age, sex and origin of the animals'. In conclusion, gastrointestinal nematode parasites were highly prevalent in the study area and this could hamper health and productivity of the small ruminants. Thus, strategic control of nematode parasites should be planned and implemented to reduce the economic losses and welfare problems of the animals.