Background <p>Public-Private Partnerships (PPPs) have emerged as a strategic approach to enhancing healthcare service delivery, particularly in resource-limited settings. In the diagnostics sector, PPPs can help address challenges such as inadequate infrastructure, workforce shortages, and supply chain inefficiencies. In Ethiopia, while private sector engagement in healthcare has long been recognized, the integration of PPPs in the Ethiopian diagnostics sector remains at an early stage, necessitating an exploration of both enabling conditions and barriers.</p> Objective <p>This study aims to examine the challenges and opportunities influencing the development of PPPs in Ethiopia’s diagnostics services.</p> Methods <p>A qualitative contextual analysis was conducted using 16 key informant interviews with government representatives, association and private sector representatives, alongside a review of major policy documents and regulatory frameworks. Thematic analysis was applied to identify key themes and sub-themes, capturing insights on opportunities and challenges of PPP in diagnostics. Atlas.ti software was used for the coding process and organized the data efficiently for analysis.</p> Results <p>The study revealed three primary themes and eleven sub-themes. First, Ethiopia’s diagnostic service environment is marked by significant growth through centralization, international collaborations, and automation, yet it continues to face profound challenges, including supply chain inefficiencies, critical shortages of reagents and skilled personnel, inadequate preventive maintenance, and geographic inequities in access. Second, opportunities for PPPs exist through a combination of an established legal and policy framework that supports structured partnerships, operational flexibility, a centralized governance model aimed at ensuring alignment with national priorities, and the potential for capacity building and knowledge transfer. Partnerships with experienced private and international actors were found to facilitate professional development of local staff, exposure to international best practices, and gradual implementation of modern technologies and services, thereby strengthening local expertise over time. Third, major challenges impede PPP implementation, including regulatory rigidity and bureaucratic delays, deep-seated mistrust between sectors, insufficient stakeholder representation in policy-making, financial constraints deterring local investment, and concerns over weak monitoring and evaluation mechanisms. Importantly, the study identified that informal, trust-based collaborations between public and private entities already exist and function pragmatically, suggesting a foundational willingness to collaborate that has not yet been systematized into formal PPPs.</p> Conclusion and Recommendation <p>While PPPs hold significant potential for strengthening Ethiopia’s diagnostics sector, addressing regulatory complexities, collaboration, and developing sustainable financing models are essential for long-term success. Strengthening governance structures, improving transparency in policy implementation, and fostering trust between public and private entities will be critical in optimizing PPPs to enhance diagnostics service delivery.</p>