Abstracts The general objective of this study was to examine factors affecting the operational performance of interest free banking services in Ethiopia with particular reference to selected private banks in Werabe town. The study has employed descriptive research design based on survey and the data were cross sectional type. The study has used both primary and secondary data which are quantitative and qualitative in nature and have been collected through structured and semi structured questionnaire and interview was used to gather the data. Questionnaires are given to IFB clients and staff in Werabe town at the chosen IFB private bank as part of this study. In this study, 397 questionnaires were distributed to IFB customers and employees selected private IFB bank’s in Werabe town. The data gathered through questionnaires were coded, entered into computer and analyzed and presented in the form of tables and charts using SPSS-25 Software. SPSS-25 was used for the simple descriptive statistics analysis data to compute mean, minimum, maximum, frequency and percentage of the study. The median score of factors and for the advanced statistical procedures of factor analysis. The analysis confirms there were significant positive relationships capacity of the bank, customer awareness and level of demand with operational performance of interest free banking services. Based on the analysis of the obtained data, found out the performance effects to IFB services as: lack of awareness of customer about IFB products, lack of service quality IFB product; lack of brand IFB product; inadequate marketing and promotion. Accordingly, the following recommendations were forwarded by the researcher based on the results of the findings in conjunction with literature review reflections about IFBS; Banks better to advice focus on important factors especially as; customer Awareness creation regarding bank products and Services; Bank promotion; Service quality; Bank brand empower and give employment opportunity as well as training women in to increase its Operational Performance IFBS and Banks should give experience to young’s as well as old age People on the way how to increase the Operational Performance of IFBS bank’s.