Background: Local data from the Asella Referral and Teaching Hospital in the town of Asella, Ethiopia reveal a high prevalence of extended-spectrum β-lactamase- (ESBL) producing Gram-negative bacteria in clinical isolates. To investigate a possible route of transmission, we determined the colonization rate of houseflies with ESBL-producing Gram-negative bacteria in the hospital compound and in the town of Asella. Methods: Houseflies were collected in August 2019 from the neonatal intensive care unit (NICU), the orthopedic ward, the hospital’s waste disposal area, and from a butchery situated 1.5 km from the hospital. After trapping, the flies were macerated and suspended in sterile normal saline. The suspensions were inoculated on MacConkey agar and incubated overnight. Species identification and antimicrobial susceptibility testing were performed using Vitek®-MS and VITEK® 2. Results: In total, 103 bacterial isolates were obtained from 85 flies (NICU: 11 isolates from 20 flies, orthopedic ward: 10 isolates from 20 flies, waste disposal area: 37 isolates from 26 flies, butchery: 45 isolates from 27 flies). The prevalence of ESBL-producing bacteria in collected flies was 82%, 90%, and 57% in NICU, orthopedic ward and the waste disposal area, respectively and 2% (1/45) in the butchery. The difference between flies trapped inside and outside the hospital compound was statistically significant (p≤0.001). The frequency of ESBL was 67% (6/9) in Raoultella spp. 67% (4/6) in Kluyvera spp., 56% (5/9) in Enterobacter spp., 50% (5/10) in E. coli and Citrobacter spp., and 44% (8/18) in Klebsiella spp.. Of the 40 ESBL-genes detected, 85% were CTX-M-like, 83% TEM-like, 23% SHV-like, and 2% CTX-M-2-like. ESBL-producing bacteria showed higher rates of antimicrobial resistance against ciprofloxacin (66% vs. 5%), gentamicin (68% vs. 3%), piperacillin-tazobactam (78% vs. 5%), and trimethoprim-sulfamethoxazole (88% vs. 16%), compared to non-ESBL-producing bacteria. Conclusion: A high proportion of the hospital’s housefly population were colonized with pathogenic ESBL-producing bacteria, but not houseflies collected at a distance of 1.5 km from the hospital. Houseflies can be potential vectors for transmission of multidrug-resistant (MDR) bacteria within hospitals. Further studies are needed to determine the source of MDR colonization in houseflies and possible impact of the high rate of MDR for nosocomial infections.