Introduction: Zootherapy involves using animals and their derivatives for medicinal purposes and is a vital component of traditional medicine worldwide. Traditional zootherapeutic knowledge (TZK) is crucial to biodiversity conservation and indigenous healing. This study investigated TZK practices, important determinants, and ecological ramifications among communities in Northwestern Ethiopia’s Awi Zone to advance sustainable practices that positively impact public health and biodiversity conservation. The main goal of this study was to understand the usage of species, cultural importance, and sociodemographic factors in Northwestern Ethiopia’s TZK. Methods: Using a purposive sampling technique, 200 respondents who had TZK and practice were selected from four districts (Ankasha Guagusa, Guagusa Shekudad, Fagita Lekoma, and Dangila), and structured interviews and questionnaires were used to collect the data. Then, data were analyzed using binary logistic regression, ANOVA, and ethnozoological indices such as the informant consensus factor, use value (UV), fidelity level (FL), and relative frequency of citation (RFC) with R and SPSS software. Results: The maximum UV (0.82) was detected in key stone species honeybees from 20 animal species used to treat 38 ailments. Rural, older (51–60 years), and less educated people were more likely to have TZK, and farmers had the highest chances (OR = 4.29, p < 0.001). The logistic regression analysis revealed that cultural background (OR = 19.29, p < 0.001) and confidence in the effectiveness of zootherapy (OR = 19.94, p < 0.001) were significant predictors of TZK. Significant correlations between TZK and ecological elements, such as species conservation and biodiversity awareness, were also confirmed. Conclusion: In the Awi Zone, TZK is important to the local healthcare system and cultural legacy. Ecological and sociodemographic aspects influence its practice, underscoring the importance of including TZK within plans for biodiversity protection. Maintaining this knowledge while ensuring ecological health requires sustainable use of animal species, conserving TZK to sustain biodiversity.