Background Universal use of iodized salt is a simple and inexpensive method to prevent and eliminate iodine deficiency disorders like mental retardation. However, little is known about the level of adequately iodized salt consumption in the study area. Therefore, the study was aimed at assessing the proportion of households having adequately iodized salt and associated factors in Wolaita Sodo town and its peripheries, Southern Ethiopia. Methods A cross-sectional study was conducted from May 10 to 20, 2016, in 441 households in Sodo town and its peripheries. Samples were selected using the systematic sampling technique. An iodometric titration method (AOAC, 2000) was used to analyze the iodine content of the salt samples. Data entry and analysis were done using Epi Info version 3.5.1 and SPSS version 16, respectively. Result The female to male ratio of the respondents was 219. The mean age of the respondents was 30.2 (±7.3 SD). The proportion of households having adequately iodized salt was 37.7%, with 95% CI of 33.2% to 42.2%. Not exposing salt to sunlight with [OR: 3.75; 95% CI: 2.14, 6.57], higher monthly income [OR: 3.71; 95% CI: 1.97–7.01], and formal education of respondents with [OR: 1.75; 95% CI: 1.14, 2.70] were found associated with the presence of adequately iodized salt at home. Conclusion This study revealed low levels of households having adequately iodized salt in Wolaita Sodo town and its peripheries. The evidence here shows that there is a need to increase the supply of adequately iodized salt to meet the goal for monitoring progress towards sustainable elimination of IDD.