Background Even though diarrhea is not lethal by itself, the lack of knowledge about its management results in devastating complications such as dehydration and lastly death. Using an oral rehydration solution (ORS) is an easy, inexpensive, and most reliable way of treating dehydration and reducing diarrhea-related mortalities. The literature revealed that Knowledge of ORS packet or pre-packaged liquids is a very important and critical factor for the utilization of ORS during the management of diarrhea. Methods We used the 2016 Ethiopian Demographic and Health Survey data, which is the fourth survey conducted by the Central Statistical Agency. A total weighted sample of 7590 reproductive-age women who gave birth within five years preceding the survey was used. Multilevel logistic regression analysis was done to assess factors associated with knowledge of ORS packet or pre-packaged liquids. Arc GIS version 10.3 and Kuldorff’s SaTScan version 9.6 software were used for the spatial analysis. Results In the multilevel analysis maternal education, media exposure, residence, community illiteracy level, and region were significantly associated with knowledge of ORS packet or pre-packaged liquids. Besides, knowledge of ORS packet or pre-packaged liquids for the management of diarrhea was not random in Ethiopia (with Moran’s Index = 0.46 and p-value <0.001), and the primary clusters spatial window was located in SNNPR, most parts of the Oromia region, and eastern parts of the Gambela region. Conclusion In this study knowledge of ORS packet or pre-packaged liquids was not random across the country. Lack of formal education, lack of media exposure, being from a rural area, and being from communities with a higher illiteracy level was associated with lower odds of knowledge of ORS packet or pre-packaged liquids. Therefore, special emphasis should be given to these high-risk groups and the hot spot regions (SNNPR, most parts of the Oromia region, and eastern parts of the Gambela region). Moreover, distributing information through different media regarding ORS packet or pre-packaged liquids is necessary.