BACKGROUND: Evidence from high-income countries demonstrates that co-morbid mental disorders in people with epilepsy adversely affect clinical and social outcomes. However, evidence from low-income countries is lacking. The objective of this study was to measure the association between co-morbid mental disorders and quality of life and functioning in people with epilepsy. METHODS: A facility-based, community ascertained cross-sectional survey was carried out in selected districts of the Gurage Zone, Southern Ethiopia. Participants were identified in the community and referred to primary health care (PHC) clinics. Those diagnosed by PHC workers were recruited. Co-morbid mental disorders were measured using a standardised, semi-structured clinical interview administered by mental health professionals. The main outcome, quality of life, was measured using the Quality of Life in Epilepsy questionnaire (QOLIE-10p). The secondary outcome, functional disability, was assessed using the 12-item World Health Organization Disability Assessment Schedule (WHODAS-2). RESULTS: The prevalence of comorbid mental disorders was 13.9%. Comorbid mental disorders were associated with poorer quality of life (Adjusted (Adj.) β -13.27; 95% CI -23.28 to-3.26) and greater disability (multiplier of WHODAS-2 score 1.62; 95% CI 1.05, 2.50) after adjusting for hypothesised confounding factors. Low or very low relative wealth (Adj. β = -12.57, 95% CI -19.94 to-5.20), higher seizure frequency (Adj.β coef. = -1.92, 95% CI -2.83 to -1.02), and poor to intermediate social support (Adj. β coef. = -9.66, 95% CI -16.51 to -2.81) were associated independently with decreased quality of life. Higher seizure frequency (multiplier of WHODAS-2 score 1.11; 95% CI 1.04, 1.19) was associated independently with functional disability. CONCLUSION: Co-morbid mental disorders were associated with poorer quality of life and impairment, independent of level of seizure control. Integrated and comprehensive psychosocial care is required for better health and social outcomes of people with epilepsy.