Background Multiple choice questions (MCQ) are used nowadays in summative assessments for certification of courses, in a competitive examination, and for recruitment. A single-best-answer stem-type MCQ is one of the formats most commonly used for this purpose; it contains a question and options from which the examinee needs to select the correct answer. Item analysis is used for the determination of the quality, validity, and reliability of the MCQ. Item difficulty index, item discrimination power, and distractor effectiveness are critical for the quality of the MCQs. Aim This study was conducted to estimate the effect of distractor effectiveness on the item difficulty index and item discriminating power. Method A test paper consisting of 200 single-best-answer stem-type MCQs with four options responded to by 400 medical undergraduates was analyzed for item difficulty index, item discriminating power, and distractor effectiveness with established item analysis formulas. The effect of distractor effectiveness on item difficulty index and item discriminating power was statistically analyzed using Epi-Info 7TM software. Result The mean item difficulty index, item discriminating power, and distractor effectiveness were 57.75% ± 28.65%, 0.4388 ± 0.36, and 84.17%, respectively (p<0.05). The item difficulty index was higher for items with single-functioning distractors in comparison to items with three-functioning distractors. Item discriminating power was higher in items with three functioning distractors in comparison to items with one and two functioning distractors. Conclusion Two or three functioning distractors show an appropriate item difficulty index and item discriminating power. In addition, item discriminating power is lower for the easy MCQs. Two to three distractors are appropriate to construct a quality MCQ.