Universities in the modern world are expected to seek and cultivate new knowledge, provide the right kind of leadership and strive to promote equality and social justice. The general objective of the study is to investigate the satisfaction level of undergraduate level students enrolled in regular program of Dire-Dawa University and there by understand Dire-Dawa University's level of service quality perceived by the students. A cross-sectional study design was conducted on students of the university selected using stratified random sampling technique. The study was anchored on the model developed by Parasuraman et al. (1988) known as SERVQUAL. Results revealed that the satisfaction level of students in the overall service of the university is 65.4%. Additionally there is significant variation in students' satisfaction across sex regarding student-instructor interaction, administrative student support service and facility supervision whereas no significant variation was seen regarding satisfaction due to undergraduate and post-graduate programs. Therefore it could be possible to conclude that majority of the students are satisfied with the service that the university offers. However it was also found that the number of the dissatisfied group was not insignificant, and therefore more effort should be made to make the satisfaction level of the students much better than the current level.