The purpose of this study is to critically examine the impact of competence based training on employability of technical and vocational college graduates in Ethiopia. Mixed methods of research design, predominantly concurrent nested strategy were employed to conduct the study. The study involved 162 instructors, 123 Level III automotive technology trainees, 87 department heads and 89 graduates, a total of 461 respondents as a sample. Moreover, 24 respondents (6 industry owners, 6 TVET college deans, 6 competence-based process owners and 6 industry trainers' leaders) were purposely selected for interview and focus group discussion. Under the study, the researcher used employability of graduates as dependent variable and competency based training as independent variable. Descriptive and inferential statistics were employed for data analysis. The study result showed that technical and vocational education and training (TVET) colleges in Ethiopia have been performing below expectations in developing demand-based curriculum and implementing competence-based training in TVET colleges and industries. As a result, among the graduates nearly 50 percent are not employed in the past two years. Hence, it is recommended that constantly consulting and involving relevant stakeholders in setting study profile, identifying intended learning outcomes and strengthening competence based learning style are vital for graduates to demonstrate employability skill, knowledge and attitude into the job that consequentially lead to graduate employment.