Urban areas are seeing a significant increase in malaria cases, and the establishment of an “exotic” urban malaria vector, Anopheles stephensi, is increasing the risk of urban malaria emergence. Immature stages of Anopheles mosquitoes were collected using the standard dipping technique from artificial breeding habitats and reared to adults. Adults aged 2–3 days were identified to species level using a morphological key and confirmed by species-specific polymerase chain reaction. The species distribution map was produced using the geographic coordinates of the breeding habitats. A total of 76 artificial containers (55 discarded tyres, 18 concrete water storage, and three plastic containers) in 21 locations in the town were visited to survey for container breeding Anopheles mosquitoes. Of the examined containers, 88% (67/76) had at least one Anopheles larva. Out of the emerged adults from immature stages, 32 were morphologically identified as An. stephensi, of which 26 (81%) were confirmed by molecular analysis. This is the first study to report An. stephensi from Arba Minch, one of the region's largest towns, highlighting the need for increased vigilance. The planned and ongoing study in and around Arba Minch will add to the continuing efforts to understand the bionomic and the role of An. stephensi in malaria transmission that will help develop a strategy to address the impending risk of urban malaria in Ethiopia.