Hundred fifty respondents (109 small-scale producers, 12 large-scale producers, 3 research centers, 26 sellers) were interviewed to assess the hygienic handling of butter and Ayib - Ethiopian cottage cheese and a total of 42 (butter 21 and Ayib 21) samples collected from 2 market types (diary product shops and open markets) and 3 producer groups (small-scale, large-scale and research center) were tested for their microbial properties using standard methods. The sanitary measures taken by the different handlers during the processing and preservation of butter and Ayib were generally found to be sub-standard. Butter sampled from dairy product shops and open markets had mean aerobic mesophilic and lipolytic counts of 3.9 and 2.36 log cfulg, respectively. Aerobic mesophilic, lipolytic and yeast and mold counts of 5.4, 2.35 and 5.97 log cfu/g, respectively, were obtained for butter sampled from three different producers. Mean counts of aerobic mesophilic bacteria, coliforms, proteolytic organisms and yeasts and molds in Ayib sampled from dairy product shops and open markets were 8.22, 4.47, 3.45 and 5.89 log cfu/g, respectively. Mean counts of 8.39, 5.36, 2.93 and 5.53 log cfu/g of aerobic mesophilic, coliform, proteolytic organisms and yeast and mold, respectively were observed in Ayib sampled from three producers. The results of the present study, indicated that butter and Ayib sampled from different markets and producers had high aerobic mesophilic bacterial count and there was high level of contamination of these products by organisms of environmental origin. This was evidenced by the high coliform counts generally observed for all samples of the dairy products considered.