Khat is the second largest export item with great economic value in Ethiopia, but the ongoing increased number of chewers in the country indirectly affects economic productivity by decreasing work-hours, household’s economic production, diversion of money to buy khat, absenteeism from work and unemployment. The study aimed at analyzing the status of khat consumption and identifying the determinants of consumption level of khat in Wolkite town of Ethiopia. Primary and secondary data sources were used to obtain relevant data required for this study. A total of 110 sample respondents were used to collect primary data. Double hurdle model was employed to identify the determinants of khat consumption. The Probit part of the model result revealed that age of respondents, religion, educational level, peer- influence and perceived benefit of khat determine consumption decision as expected. Results from truncated part of Double hurdle showed employment status, perceived benefit, education level, khat price and work environment susceptibility determine the level of khat consumption in the study area. It is to recommended to strengthen the provision of formal education, encourage youths’ knowledge through different training and experience sharing, facilitate a program to provide especial education on socio- economic and health consequences of khat chewing to primary, secondary, preparatory and university students, reduce unemployment through providing option job opportunities, strengthen the provision of a choice of sport station and facilities to the society, and enhance safe working environment for khat chewing to be done by required stakeholders. Key words: Consumption, double hurdle model, Khat, Wolkite.