This study was designed to estimate cost of production of rice and assessing its profitability under smallholder farmers in lowland agroecologies of Fogera plain, Ethiopia. Descriptive statistics and enterprise budget were used to analyze data collected from selected farmers. The finding of the study reveals the average productivity of rice was 3.6 tone per hectare. The labor cost was the main cost item in rice production which took about 70% of the total variable cost, and followed by material and animal power costs. From the total operational costs weeding cost took the maximum share about 44.56%. The enterprise budget analysis result indicates that sampled farmers obtained a profit margin of 49.51% per hectare with benefit cost ratio of 1.98, and breakeven price and yield of 4.66 ETB per kg and 2064 kg per hectare. Moreover, gross margin of rice production is more sensitive for grain price and yield fluctuations than input costs. Thus, rice production is a profitable enterprise and the study suggest that research institution should focus on developing and promoting productivity improving and labor saving technologies. In addition, to reduce price fluctuation strengthen the market information delivery system and group marketing.