Background: A Community-Based Essential Newborn Care is a national initiative that incorporates a newborn care program into the continuum of maternal and child health care through enhancing community participation to reduce child morbidity and mortality and encourage healthy growth and development. This study aimed at assessing the level of Community-Based Essential Newborn Care service uptake and its associated factors among rural women in the Guraghe zone, Southern Ethiopia, 2020. Methods: A community-based cross-sectional study was conducted in the rural districts of Southern Ethiopia, from 1 to 31 May 2020. A multistage sampling technique was applied. Using a systematic random sampling technique, a total of 818 respondents were selected. The data collected by a pretested structured questionnaire were entered into EpiData 3.1 and exported to the Statistical Package for Social Sciences (Version 23) for analysis. To identify significant predictors of Community-Based Essential Newborn Care utilization, a multivariable logistic regression analysis was fitted. Adjusted odds ratios with 95% confidence intervals were used to estimate the strength of associations, and statistical significance was declared at a p value <0.05. Results: One-third, 269 (33.1%) (95% confidence interval = 30.0–36.2), of women and their newborns got the entire packages of the Community-Based Essential Newborn Care program. Desire on the last pregnancy (adjusted odds ratio = 2.66, 95% confidence interval = 1.56–4.51), birth preparedness and complication readiness plan (adjusted odds ratio = 4.82, 95% confidence interval = 3.26–7.12), timing of the postpartum visit (adjusted odds ratio = 3,56, 95% confidence interval = 2.00–6.34), attending monthly pregnant women conference (adjusted odds ratio = 3.01, 95% confidence interval = 1.99–4.57), and being a certified model household (adjusted odds ratio = 1.88, 95% confidence interval = 1.24–2.85) were identified as key predictors of Community-Based Essential Newborn Care utilization. Conclusion: The uptake of the full Community-Based Essential Newborn Care packages in the study area was low. Health care providers at the health institution and community level should give due emphasis to improve contraceptive service delivery. Besides, health extension workers at the community level should work on providing immediate postpartum visits, creating model households, and strengthening pregnant women conferences.