In recent decades, Ethiopia has been a major recipient of development aid and made considerable progress towards achieving development outcomes, particularly in the health sector. Central to this has been reforms prioritizing community-based health interventions and a commitment to attaining universal health coverage (UHC). Yet while encouraging, access to health services has tended to disproportionately benefit those with greater economic means, higher levels of education, or those residing in urban areas. In light of this, the current article examines the progress towards UHC and donor organizations’ perceptions of how development aid intersects with issues of health equity in Ethiopia. Using primary qualitative interviews with bilateral and multilateral donor organizations and a review of relevant policy documents, we consider how issues of equity in health coverage are understood and reflected in the positions of donors. In doing so, we shed light on the processes underlying and shaping donor actions in supporting progress towards achieving equitable and universal health coverage in Ethiopia and identify challenges that remain.