BACKGROUND: Malaria has become one of the major health problems currently facing the urban communities. The rapid increase in urbanization, rural-urban migration and climatic changes are among the main factors contributing for the rise of malaria in urban areas. To our knowledge, there has been no malaria prevalence study so far conducted in Gondar Town. OBJECTIVE: The aim of this study was to determine the prevalence of malaria infection and its associated risk factors in Gondar Town. METHODS: A community-based survey was conducted in three randomly selected malarious Kebeles of Gondar Town during November-December 2004. Blood films were collected from a finger-prick of 734 members of the selected households for microscopic examination of malaria parasites. RESULTS: Among 734 examined blood films, 39 (5.3%) were positive for malaria infection, of which 29 (74.4%) were due to Plasmodium falciparum and 10 (25.6%) due to P. vivax. Seven (18%) malaria infections were reported from children under the age of five years, indicating the endemicity of malaria to the study area. Age-specific rates show that higher malaria prevalence rate was found among under-five children (7.2%) and 15-19 year-old age group (7.3%). Proximity to mosquito breeding sites was found to be the main risk factor for malaria infection (OR = 2.4, 95% CI. 1.2-5.1). CONCLUSIONS: The prevalence of malaria in Gondar Town was found to be high. The prevalence was strongly associated with proximity of residence to potential mosquito breeding sites. The occurrence of the disease among under-five children would indicate that malaria is indigenous to the area. Use of personal protection methods such as insecticide treated mosquito nets should be scaled up, and malaria control interventions should target residents who are at a closer proximity to mosquito breeding sites.