Background: There are numerous myths and beliefs about mental illness that may run against scientific truths and perspectives, and the way that the community perceives mental illnesses varies across societies and cultures. Therefore, the aim of this study was to assess community perception towards mental illnesses and associated factors in Addis Ababa, Ethiopia, in 2022. Methods: A community-based cross-sectional study using a multistage sampling technique was conducted in the community of Addis Ababa, Ethiopia. A structured and pretested questionnaire was utilized to collect data from the 626 study participants. To find variables linked to community perception towards mental illnesses, a bivariable and multivariable logistic regression analysis model was carried out. Significant factors were identified with a p-value <0.05 and a 95 % confidence interval. Results: According to the finding of this study 315 study participants (50.3 %) had a poor perception towards mental illness. It was discovered that having a negative perception of mental illness was related to being between the ages of 30-39 (AOR = 1.8, 95 % CI, 1.11-2.97), getting information from friends (AOR = 0.25, 95 % CI, 0.07-0.84), and working as a merchant (AOR = 1.86, 95 % CI, 1.06-3.2). Conclusions: A significant proportion of population has an unfavorable opinion of mental illnesses. Additionally, participants between the ages of 30-39, mental health information from friends, and merchant occupation were statistically significant variables. Therefore, interventions aimed at adults, peer influencers and merchants might be more successful in reducing negative attitudes of population towards mentally ill individuals.