Ethiopian agriculture is mainly rainfed. It is therefore necessary to understand the rainfall climatology and the evapotranspiration needs of crops. In this paper an attempt is made to present the characteristics of rainfall and evaporation over Ethiopia. The mean annual rainfall is computed as an arithmetic mean of individual yearly values for each station in the data set. In addition, the mean annual rainfall variability has been computed. The analysis shows that the rainfall amount generally decreases from the southwest towards the north and eastern parts of the country with some modifications over the Sidamo-Bale highlands. The results of this study also indicate that areas with high rainfall variability generally receive low amount of rainfall. Potential evapotranspiration (PET) is an important parameter for computing climatic waer balance as it is used to determine the length of the growing period and to estimate crop water requirements. The distribution of PET over Ethiopia is computed using the Penman formula. The results of this study show that the highest annual PET amount is observed over the northeastern, southeastern and northwestern lowlands of the country that receive very little annual rainfall. The analysis of rainfall and the evaporative demand presented in this paper will enable agriculturalists in planning natural resources management strategies for sustainable rainfed agriculture.