Abstract Background Calves are important assets for replacement of cows for the future dairy and beef herd sustainability. However, calf hood diseases have a significant financial impact on dairies resulting from treatment costs, genetic loss, and impaired future performance. Objective The purpose of the present research is for isolation and identification of Salmonella and E. coli infection in diarrheic calves, assessing risk factors for occurrence of calf diarrhea and examining antimicrobial susceptibility of isolated bacteria’s. Methodology: A cross- sectional study on the isolation, identification and antimicrobial susceptibility of E. coli and Salmonella was carried out on calves up to two months of age from November, 2018 to March, 2019 in and around Sebeta town, Ethiopia. The detection of E. coli and Salmonella was done by conventional bacteriological method and biolog (semiautomatic machine). The data was analyzed by Stata 12. Results It was found that the detection rate of E. coli and Salmonella from 129 sampled diarrheic calves were 65 (50.3%) and 8 (6.2%) respectively. Age (E. coli, X2 = 9.429, P = 0.024; Salmonella, X2 = 8.161, P = 0.043), sex (E. coli, X2 = 11.225, P = 0.001, though not significant for Salmonella) and feeding time of colostrum (X2 = 7.510, P = 0.023; Salmonella, X2 = 6.678, P = 0.036) were risk factors associated with the incidence of E. coli and Salmonella. The antimicrobial study revealed that most of the E. coli was highly susceptible to sulphamethoxazole˖trimethoprim, chloramphenicol, gentamicin and ampicillin and highly resistant to tetracycline (29.23%) and followed by polymixin B (6.1%), and from isolates of Salmonella all showed 100% susceptibility for sulphamethoxazole˖trimethoprim and polymixin B, 87% to Ampicillin, chloramphenicol and tetracycline while 75% to gentamicin. Conclusion Based on those findings, it can be concluded that calf diarrhea was found to be high and could affect dairy production in the study area. The triggering ecological, social and bacterial genetic factors for the widespread distribution of multidrug resistant Salmonella and E.coli are not known, thus requires comprehensive study.