The Internet has immense mediational potential in ELT in terms of providing learners with comprehensible input, a platform for social interaction, and opportunities to produce linguistic output. This study explores EFL teachers' perceptions and utilization of the Internet in ELT at Bahir Dar University (BDU) in Ethiopia; it also identifies the challenges and barriers to effective use of the Internet as a mediational tool. Twenty-one randomly selected instructors at BDU responded to a questionnaire. The results show that teachers have favorable perceptions of the mediational role of the Internet; however, they show fairly limited utilization of the Internet for teaching purposes. Therefore, there appears to be a mismatch between BDU instructors' positive perceptions and current practices. Furthermore, inadequacy of Internet access, students' lack of Internet skills, lack of skills of using the Internet for ELT purpose, extra work-load, time constraints were the major barriers to effective use of the Internet as a mediational tool. Based on these results, it is suggested that teachers' awareness be raised on how to leverage the Internet mediational artifacts in this limited technology context.