ABSTRACT Subclinical mastitis (SCM) remains a major productivity‐limiting disease in dairy cattle, particularly in low‐resource settings where diagnostic access is limited. The California mastitis test (CMT) is widely used for on‐farm SCM detection but is increasingly inaccessible in Ethiopia due to high costs and supply constraints. This study aimed to evaluate the diagnostic performance of a newly formulated, low‐cost Ethiopian mastitis test (EMT) reagent as an alternative to CMT under field conditions. A cross‐sectional study was conducted from October 2024 to February 2025 in Mekelle, Ethiopia, involving 112 lactating dairy cows across diverse farm settings. Milk samples were tested using both EMT and CMT reagents, and somatic cell count (SCC) served as the reference standard. Diagnostic agreement was assessed using sensitivity, specificity, predictive values, Kappa statistics and receiver‐operating characteristic (ROC) analysis. EMT demonstrated a sensitivity of 90.14%, specificity of 100%, positive predictive value of 100% and negative predictive value of 85.42%. The Kappa value ( κ = 0.87) indicated strong agreement with CMT. ROC analysis confirmed high diagnostic accuracy (area under the curve [AUC] = 0.908), although slightly lower than CMT (AUC = 1.0). EMT also showed strong associations with established SCM risk factors, such as cow age, breed, hygiene, nutrition and housing. These findings validate EMT as a reliable, field‐adaptable and economically feasible diagnostic tool for SCM. Its adoption could enhance udder health surveillance, reduce reliance on imports and promote sustainable dairy production in Ethiopia. National scale‐up and broader ecological validation are recommended to support policy integration and widespread implementation.