Background Besides its contribution in the treatment of Human Immunodeficiency Virus-infected patients, anti-retroviral drugs may also cause mild to serious adverse effects. It is the main causes for poor drug adherence, treatment discontinuation and changes in Anti-Retroviral Treatment (ART) regimens. Thus, the aim of this study was to assess the incidence and predictors of adverse drug reaction among adult Human Immunodeficiency Virus positive patients on anti-retroviral treatment from January 1, 2013 up to December 30, 2018 at Arba Minch town public health facilities, Southern Ethiopia. Methods An institution based retrospective cohort study was conducted on 456 charts. Secondary data was collected by structured questionnaire. Data were entered in Epi-data version 4.4.2 software and exported to STATA Version 14 for analysis. The Kaplan-Meier survival curve with Log-rank was used to estimate survival time. Bi-variable and multivariable Cox proportional hazard regression models were fitted to identify predictors of adverse drug reaction. In the bi-variable analysis, the variables with p-value < 0.25 were eligible for multivariable analysis. Finally, variables with p-values less than 0.05 in the multivariable Cox regression were considered as independent predictors. The statistical significance was declared at p-value<0.05. Results Out of 456 patients observed for 14,903 person-months (pm), 79 experienced adverse drug reactions and the overall incidence density rate was 0.53/100 pm, CI: 0.42–0.66/100 person’s month or 6.36 per 100 Pearson year of observation. Females were at higher risk of experiencing adverse drug reactions (ADRs) compared to males [AHR = 2.35; CI (1.18, 4.69)]. The risk of experiencing ADRs among patient with advanced WHO clinical stage (stage III and IV) was higher compared to stage I and II [AHR = 3.0, CI (1.22, 7.37)]. The risk of experiencing an ADR was at any given time higher among AZT and NVP containing regimens compared to TDF and EFV containing regimens. Finally, the risk of ADR among those patients from the health center was reduced by 59% compared to hospital patients, [AHR = 0.41, CI (0.17, 0.97)]. Conclusion and recommendation The incidence rate of ADRs was reduced among patients on ARVs compared to previous studies and it was high during the early years of ART initiation. HIV patients should be closely followed in the early years of ART initiation, since this is the time of highest risk ADRs and emphasis should be given for female and clinically advanced patients.