Background: Toxoplasma gondii is an obligate intracellular protozoan parasite that infects humans and a broad spectrum of warm-blooded vertebrates. The present study was undertaken with the objectives of isolation and determining the genotypes of T. gondii strains from sheep and goats slaughtered in East and West Shewa Zones of Oromia Regional State, Central Ethiopia. Methods: Hearts of 47 sheep and 44 goats that were seropositive in the Direct Agglutination Test (DAT) were bioassayed in mice. A multiplex PCR assay with 15 microsatellite markers was employed for genotyping of T. gondii isolates from sheep and goats. Results: Viable T. gondii were isolated from 47 (51.65%) animals, 27 sheep and 20 goats. Most isolates caused sub-clinical infections in mice, however, 2 sheep and 1 goat isolates were mouse-virulent, killing mice between 19–27 days post-inoculation. The success of T. gondii isolation in mice increased significantly (P = 0.0001) with higher DAT antibody titers in sheep and goats. Genotyping revealed that 29 (87.88%) of the 33 isolates were Type II, 3 (9.09%) were Type III and 1 (3.03%) was atypical. Three strains (one type II, one type III, and the atypical genotype) were virulent for mice. Conclusions: T. gondii tissue cysts in sheep and goats slaughtered for human consumption are widespread. This is the first report on isolation and genotyping of T. gondii from sheep and goats of Ethiopia.