BackgroundEnvironmental Enteropathy is an inflammatory condition of the gut that leads to intestinal barrier dysfunction. It is a common problem in resource-limited countries and results from exposure to larger quantities of fecal bacteria to poor personal hygiene and environmental sanitation. Due to poor intestinal permeability, there is a problem with absorption of nutrients, which in turn leads to growth faltering, poor cognitive development, and oral-vaccine failure. The aim of this study was to identify the children with an elevated lactulose to mannitol ratio (indicative of possible environmental enteropathy) and its association with water sanitation and hygiene in slum areas of Jimma Town so as to mitigate the problem of malnutrition in under-five children.MethodsA community-based cross-sectional study was carried out from January to April 2021. A Lactulose mannitol test was performed to determine the prevalence of elevated lactulose to mannitol ratio (possibly environmental enteropathy) in children aged 12 to 59 months. A pretested questionnaire was used to collect data on water sanitation and hygiene (WASH) indicators and sociodemographic characteristics. A multivariable logistic regression analysis was used to isolate independent predictors for possible environmental enteropathy. All tests were two-sided and statistical significance was declared at P<0.05.ResultsThe results of this study showed that 19.3% (95%CI: 14.8–23.7) of children had an increased lactulose to mannitol ratio (>0.15). On multivariable logistic regression analysis, the variables drinking water from unimproved water sources (AOR 3.741; 95%CI: 0.914–15.310,p = 0.048), unsafe coverage of water storage (AOR 0.363; 95%CI: 0.169–0.777, P = 0.009), public latrine utilization (AOR 0.139 95%CI: 0.024–0.816, P = 0.029),and hand washing less than 3 critical time of hand washing practices (AOR 4.369;95%CI: 1.411–13.524,P = 0.011) were significantly associated with an increased in lactulose mannitol ratio (possible indicative of intestinal permeability/environmental enteropathy).ConclusionThis study showed that one fifth of under-five children in Jimma Town had an elevated lactulose to mannitol ratio (possibly environmental enteropathy). The WASH sectors and other governmental organizations should give emphasis to areas with poor water sanitation and hygiene to mitigate the problem of environmental enteropathy and related consequences like growth faltering, poor cognitive development, and oral-vaccine failure in the study area.