Background: Human Immunodeficiency Virus (HIV) pandemic has exacerbated tuberculosis disease especially in Sub-Saharan African countries. The World Health Organization (WHO) and Joint United Nations Program on HIV/AIDS (UNAIDS) have recommended Isoniazid Preventive Therapy (IPT) for HIV infected patients to reduce the burden of tuberculosis (TB). Ethiopia has been implementing IPT since 2007. However, effectiveness of IPT in averting occurrence of active tuberculosis among HIV infected patients has not been assessed. Methods: Retrospective cohort study was employed using secondary data from public health institutions of Addis Ababa. Descriptive statistics and Generalized Linear Model based on Poisson regression was used for data analysis. Results: From 2524 HIV infected patients who were followed for 4106 Person-Years, a total of 277 incident Tuberculosis (TB) cases occurred. TB Incidence Rate was 0.21/100 Person-Year, 0.86/100 Person-Year & 7.18/100 Person-Year among IPT completed, in-completed and non-exposed patients, respectively. The adjusted Incidence Rate Ratio (aIRR) among IPT completed vs. non-exposed patients was 0.037 (95% CI, 0.016-0.072). Gender, residence area, employment status, baseline WHO stage of the disease (AIDS) and level of CD4 counts were identified as risk factors for TB incidence. The aIRR among patients who took Highly Active Anti-Retroviral Therapy (HAART) with IPT compared to those who took HAART alone was 0.063 (95% CI 0.035-0.104). IPT significantly reduced occurrence of active TB for 3 years. Conclusions: IPT significantly reduced tuberculosis incidence by 96.3% compared to IPT non-exposed patients. Moreover concomitant use of HAART with IPT has shown a significant reduction in tuberculosis incidence by 93.7% than the use of HAART alone. Since IPT significantly protected occurrence of active TB for 3 years, its implementation should be further strengthened in the country.