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The demand for fresh water is constantly increasing among all water users. Irrigation in Ethiopia consumes a large amount of water extracted from various sources. Hence, efficient water use and management are currently the major concerns in the country. Thus this paper aims to review the advancements, challenges, and opportunities regarding improving irrigation water use efficiency in Ethiopia. Irrigation in Ethiopia started in the 1950s with traditional irrigation systems. Now modern irrigation, including sprinkler and drip irrigation, is practiced in some parts of the country. The review showed that even though the farmers have practicing irrigation for a long time, still they cannot surpass subsistence farming. Furthermore, improvements in irrigation water use efficiency through proper scheduling and on-farm management are not satisfactory. The paper revealed the challenges that hinder water use efficiency improvement includes crop diseases, socio-economic factors, institution and policy-related issues, limitation in technical and human capacity, lack of agricultural input as well as market and nature-related factors. In the future, increased use of remote sensing techniques, more versatile sensors, simulation, and quantitative models are likely to be seen to improve water use efficiency. In most cases where water is saved as a result of the efficient use of technologies, the spare water ends up being used to expand the irrigation area, which results in an increased income for the household. Hence, to achieve net water savings, water-efficient technologies and practices need to be used in combination with other measures such as incentives for conservation and proper use. Besides, appropriate regulations should be set that limit water allocation and usage. The government and partners should allocate resources for capacity building of farmers regarding irrigation, which in extension will lead to enhancement in WUE.