Tourism is very important for the development economic sector, and it is deeply affected by climate. Ethiopia is a developing country with less income from the tourism sector in spite of favourable climatic conditions for tourism development. So, the specific objectives of this study were first to modify Tourism climate index developed by Mieczkowski (1985) to fit climatic data in GIS environment and second to rank Ethiopian towns based on the tourism climate index (TCI) results. Seven climatic variables based on monthly means were integrated into the TCI. Climate data of 112 points was collected and processed to create the images with Inverse distance weighted model. The data of each climate variable was classified using conditional statements following TCI’s rating scheme. The monthly TCI score value was extracted to the point features of 870 towns of Ethiopia. To find annual TCI monthly TCI values were added. Finally, Towns were ranked based on unique annual TCI values. As a result, all the towns were grouped in 44 rank classes. The results reveal, Ethiopia has very high potential for the sustainable development of tourism as 190 towns were found in an ideal category ≥3 month per annum. This work will be useful for policy makers to plan and project sustainable development of tourism in Ethiopia