The study was aimed at mapping the dairy value chain, assessing constraints and opportunities in the sector, and identifying factors affecting channel choices of producers in Harar and Dire Dawa milkshed areas. Data were collected from 93 producers, six collectors, seven wholesalers, seven retailers, and ten consumers. Both descriptive and econometric analysis were employed. The study revealed that the channel choices available to producers include selling to collectors, wholesalers, retailers, and directly to consumers. The multinomial model output indicated that being in rural areas, breed type, separate milking place, and supply of hay negatively determined the choice to sell to wholesalers, retailers, and consumers. In contrast, education status and milk storage duration positively determined producers’ choice not to sell to collectors. The major recommendations include provision of training, disseminating dairy technologies, encouraging value chain actors to add values; and enhancing collective actions of producers.