Objective. To assess undernutrition and associated factors among children aged 6–59 months in Gondar Town, northwest Ethiopia. Methods. A community-based cross-sectional study was conducted in 2014. Multistage sampling method was used to select study participants. Structured interviewer administered questionnaire and anthropometric measurements were used. Binary logistic regression was fitted to identify associated factors. Results. The prevalences of wasting and stunting were 6.8% and 45.7%, respectively. Higher odds of wasting were observed among children whose fathers were daily laborers (AOR = 2.63), children who had eating problem (AOR = 2.96), and those who were not exclusively breast-fed for the first six months (AOR = 5.63). Similarly, higher odds of stunting were found among female children (AOR = 1.65), children who lived in households having four to six families (AOR = 2.14), and children who did not start breast-feeding within one hour of birth (AOR = 0.67). Conclusion. Childhood undernutrition was a significant problem. Child eating problem, paternal occupation, and exclusive breast-feeding were associated with wasting, whereas family size, child sex, and breast-feeding initiation time were associated with stunting. Therefore, strengthening of early initiation and exclusive breast-feeding, promoting healthcare seeking behavior, and designing social support programme for poor family are recommended to reduce undernutrition.