A cross-sectional study was carried out on 352 samples (120 fecal, 92 beef cut, and 140 environmental swabs) to investigate the occurrence of E. coli O157:H7 in raw beef and to assess its antimicrobial susceptibility profile in slaughterhouses and butcher shops in Bishoftu town, Ethiopia. The samples were enriched by modified tryptone soy broth supplemented with novobiocin (mTSB + N) at the ratio of 1:9 BPW to mTSB + N and incubated overnight at 41.5 ± 0.5 ̊C (24 h). Latex agglutination was performed for confirmation of E. coli O157:H7 using an RIM E. coli O157:H7 latex test kit. The isolates were further tested for their resistance against antimicrobial susceptibility to 13 antimicrobials using the Kirby–Bauer disk diffusion method. Out of 352 samples, 14 (4.0%) were positive for E. coli O157:H7 serotype; of which, 28.6% (4/14), 21.4% (3/14), and 50% (7/14) were from fecal, beef, and environmental swab samples, respectively. A significant difference in the occurrences of the pathogen was observed among the sources of samples (p < 0.05). The antimicrobial susceptibility test revealed high resistance to 3 commonly used drugs: tetracycline (100%), erythromycin (92.8%), and ampicillin (64.3%). All E. coli O157 isolates were susceptible to azithromycin, cefotaxime, and chloramphenicol. However, of 14 isolates, 12 (85.8%) were resistant to ≥ 3 classes of antimicrobial agents. The current study warrants the need to implement appropriate hygienic measures in slaughterhouses and butcher shops to safeguard public health.