Background The World Health Organization has declared that infection with SARS-CoV-2 is a pandemic. Experiences with SARS in 2003 and SARS-CoV-2 have shown that health professionals are at higher risk of contracting COVID-19. Hence, it has been recommended that aperiodic wide-scale assessment of the knowledge and preparedness of health professionals regarding the current COVID-19 pandemic is critical. Objectives This study aimed to assess the knowledge and preparedness of health professionals regarding COVID-19 among selected hospitals in Addis Ababa, Ethiopia. Methods A facility-based cross-sectional study was conducted from the last week of March to early April, 2020. Government (n = 6) and private hospitals (n = 4) were included. The front-line participants with high exposure were proportionally recruited from their departments. The collected data from a self-administered questionnaire were entered using EpiData and analyzed in SPSS software. Both descriptive statistics and inferential statistics (chi-square tests) are presented. Results A total of 1334 health professionals participated in the study. The majority (675, 50.7%) of the participants were female. Of the total, 532 (39.9%) subjects were nurses/midwives, followed by doctors (397, 29.8%) and pharmacists (193, 14.5%). Of these, one-third had received formal training on COVID-19. The mean knowledge score of participants was 16.45 (±4.4). Regarding knowledge about COVID-19, 783 (58.7%), 354 (26.5%), and 196 (14.7%) participants had moderate, good, and poor knowledge, respectively. Lower scores were seen in younger age groups, females, and non-physicians. Two-thirds (63.2%) of the subjects responded that they had been updated by their hospital on COVID-19. Of the total, 1020 (76.5%) participants responded that television, radio, and newspapers were their primary sources of information. Established hospital preparedness measures were confirmed by 43–57% of participants. Conclusion The current study revealed that health professionals in Addis Ababa, Ethiopia, already know important facts but had moderate overall knowledge about the COVID-19 pandemic. There were unmet needs in younger age groups, non-physicians, and females. Half of the respondents mentioning inadequate preparedness of their hospitals point to the need for more global solidarity, especially concerning the shortage of consumables and lack of equipment.