Background: Addressing family planning in the postpartum period is crucial for better maternal, neonatal and child survival because it enables women to achieve healthy interval between births. The contraceptive behavior of women in the postpartum period is usually different from other times in a woman's life cycle due to the additional roles and presence of emotional changes. Therefore, this study is conducted with the aim of assessing the contraceptive behavior of women in the postpartum period. Methods: A community-based cross-sectional study was conducted in August 2013 among women who gave birth one year before the study period in Gondar town, Northwest Ethiopia. Multistage cluster sampling technique was employed to recruit a total of 703 study participants. For data collection, a structured and pretested questionnaire was used. Descriptive statistics were done to characterize the study population using different variables. Bivariate and multiple logistic regression models were fitted. Odds ratios with 95% confidence intervals were computed to identify factors associated with contraceptive use. Results: Nearly half (48.4%) of the postpartum women were using different types of contraceptives. The most commonly used method was injectable (68.5%). Resumption of mensus [Adjusted Odds Ratio (AOR) = 8.32 95% Confidence Interval (CI): (5.27, 13.14)], age ≤24 years [AOR = 2.36, 95% CI: (1.19, 4.69), duration of 7-9 months after delivery [AOR = 2.26 95% CI: (1.12, 4.54)], and having antenatal care [AOR = 5.76, 95% CI: (2.18, 15.2)] were the factors positively associated with contraceptive use in the extended postpartum period. Conclusion: Postpartum contraceptive practice was lower as compared to the Ethiopian demographic and health survey 2011 report for urban areas. Strengthening family planning counseling during antenatal care visit and postnatal care would improve contraceptive use in the postpartum period.