| Amber Henshaw BBC, Addis Ababa |
Police confirmed the bus was on its way from the capital Addis Ababa to Gambella some 700km to the west when it was ambushed near the village of Bonga.
Aid workers said the attack was about 1600 local time (1300 GMT) on Sunday.
Sources say about 15 attackers shot and killed the driver, causing the bus to crash before the gang climbed aboard and started shooting passengers.
The attackers wore military attire, sources say.
Forty people were wounded in addition to those killed.
Unconfirmed reports blame the attack on rebels of the Anuak community who have been at loggerheads with the Nuer over access to pasture, water and fertile land in the Gambella region.
Calm after clashes
Meanwhile in the southern Ethiopian area of Borena, calm has been restored after 10 days of inter-clan clashes which left between 100 and 150 people dead and thousands of others displaced.
Clan leaders have now managed to restore peace and will hold meetings with the government in two days time to try and resolve the issue.
The Borena area has been suffering from drought over the past few months.
Aid agency Oxfam says the pastoralists have been moving around the region looking for water and grazing land.
A spokesman for the NGO said this had exacerbated tensions between the different clans.
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