BACKGROUND: Globally, economic evaluation (EE) is increasingly being considered as a critical tool for allocating scarce healthcare resources. However, such considerations are less documented in low-income countries, such as in Ethiopia. In particular, to date there has been no assessment conducted to evaluate the perception and practice of and barriers to health EE. OBJECTIVE: This paper assesses the use and perceptions of EE in healthcare decision-making processes in Ethiopia. METHODS: In-depth interview sessions with decision makers/healthcare managers and program coordinators across six regional health bureaus were conducted. A qualitative analysis approach was conducted on three thematic areas. RESULTS: A total of 57 decision makers/healthcare managers were interviewed from all tiers of the health sector in Ethiopia, ranging from the Federal Ministry of Health down to the lower levels of the health facility pyramid. At the high-level healthcare decision-making tier, only 56 % of those interviewed showed a good understanding of EE when explaining in terms of cost and consequences of alternative courses of action and value for money. From the specific program perspective, 50 % of the prevention of mother-to-child transmission of HIV/AIDS program coordinators indicated the relevance of EE to program planning and decision making. These respondents reported a limited application of costing studies on the HIV/AIDS prevention and control program, which were most commonly used during annual planning and budgeting. CONCLUSION: The study uncovered three important barriers to growth of EE in Ethiopia: a lack of awareness, a lack of expertise and skill, and the traditional decision-making culture.